Rental income tax & Section 24
UK rental profits are taxed in the UK even if you live abroad, and mortgage-interest relief is capped at a 20% tax credit.
Who it applies to
Every landlord with UK rental income, resident or not. Non-residents also fall under the Non-Resident Landlord Scheme.
How it affects your return
For 2026/27, rental profit is taxed at 20% / 40% / 45% after allowable expenses. Section 24 means residential mortgage interest is not deducted as an expense — instead you get a basic-rate (20%) tax credit, which hurts higher-rate landlords. From April 2027 separate property-income rates of 22% / 42% / 47% are due to apply (announced, verify enactment).
Common mistakes
- Deducting full mortgage interest as an expense — Section 24 only gives a 20% credit for residential lettings.
- Assuming no UK tax is due because you are non-resident — UK rental income is UK-taxable.
- Ignoring the announced +2-point property-income rates from April 2027 when projecting returns.
Investor action checklist
- Register for UK Self Assessment and, if abroad, the Non-Resident Landlord Scheme.
- Track allowable expenses and mortgage interest separately.
- If a higher-rate taxpayer, model the Section 24 credit, not a full deduction.
- Check MTD for Income Tax if your qualifying income is £50k+ (in force from April 2026).
Disclaimer. This page is for general education only and is not tax, legal, mortgage, or investment advice. UK tax rules change and depend on your personal circumstances. Always consult a qualified UK tax adviser before making a decision.
Disclaimer. The information on Brick.sg is for general education and market research only. It is not financial, investment, tax, mortgage, or legal advice. Property investments involve risk, and returns are not guaranteed. Always seek independent professional advice before buying UK property.