Section 24 mortgage-interest restriction
Individual landlords can no longer deduct mortgage interest as an expense — only a 20% tax credit — which can push higher-rate investors into tax on loss-making lets.
Who it applies to
Individuals (and partnerships) letting residential property with a mortgage. Companies are not affected — they still deduct interest in full.
How it affects your return
Your taxable profit is calculated before deducting finance costs, then a 20% credit is applied. A higher-rate (40%) landlord effectively gets relief at only 20% on interest, so as rates rose this restriction became a major drag — and in extreme cases you can owe tax even when the property barely breaks even.
Common mistakes
- Modelling returns as if full interest were deductible.
- Assuming a limited company is always better — extraction and running costs can offset the Section 24 saving.
- Ignoring that being pushed into the higher-rate band by 'gross' rental profit can also cut your personal allowance.
Investor action checklist
- Calculate tax on profit before interest, then subtract the 20% credit.
- Compare personal vs company ownership with the calculator before buying.
- Stress-test at a higher mortgage rate — Section 24 bites hardest when rates rise.
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.