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Home › Tax glossary › Section 24
UK tax glossaryUpdated October 2026What is Section 24 for landlords?
A plain-English explanation from Cangaf's ACCA-qualified accountants, with the 2026/27 rules.
Section 24 in briefSection 24 is the rule that stops individual landlords deducting mortgage interest and other finance costs from their rental income. Instead, you get a tax credit worth 20% of those costs. Higher-rate landlords lose relief they used to get at 40% or 45%, and the rule can push some landlords into a higher tax band.
Key facts
| Applies to | Individual landlords and partnerships letting residential property |
| Doesn't apply to | Limited companies and furnished holiday lets before April 2025 |
| Relief | 20% tax credit on mortgage interest and finance costs |
| Fully in force | Since April 2020, after a four-year phase-in |
How it works
Your rental profit is calculated without deducting mortgage interest. Tax is worked out on that higher profit, then 20% of your finance costs is taken off your tax bill. Basic-rate landlords usually pay about the same as before. Higher-rate landlords pay more.
Worked example
A higher-rate landlord with £20,000 rent, £4,000 of costs and £10,000 mortgage interest is taxed on £16,000 at 40%, which is £6,400. Less the 20% credit of £2,000, the tax is £4,400. Before Section 24, the tax would have been 40% of £6,000, which is £2,400.
Ways to reduce the impact
Options include transferring ownership to a lower-earning spouse, paying down borrowing or, for new purchases, buying through a limited company. Each has costs, so we model them before you act.
Common questions
Does Section 24 apply to limited companies?
No. Companies can deduct mortgage interest in full as a business expense. That's one reason more landlords now buy through companies.
Can I carry forward unused finance costs?
Yes. If the 20% credit is more than your tax on the property income, the unused finance costs carry forward to future years.
Will the property income tax rise affect Section 24?
Property income tax rates rise by 2 percentage points from April 2027, which increases the tax on rental profit. We'll update your figures once the detailed rules are final.
Official guidance: Restricting finance cost relief for individual landlords (GOV.UK)
