What is Section 24 for landlords?

A tax change that stopped individual landlords deducting mortgage interest as a normal expense. Instead you get a tax credit worth 20% of your finance costs, which can significantly increase the tax bill for higher-rate taxpayers.

Does Section 24 affect limited companies?

Not in the same way. A limited company can still deduct mortgage interest against its rental profits normally, which is part of why some landlords consider holding property through a company.

Should I move my properties into a limited company?

It can help with Section 24, but transferring existing property into a company can trigger Capital Gains Tax and Stamp Duty, so it's rarely a simple win. The numbers need running carefully for your situation before you act.

Why am I paying tax when my rental barely breaks even?

Because Section 24 means your full rental income is taxed with only a 20% credit for mortgage interest, rather than the interest being fully deducted. For higher-rate taxpayers this can mean tax on 'profit' the mortgage has largely absorbed.

Section 24: what the mortgage interest changes mean for landlords

If you're an individual landlord with a mortgage, Section 24 is the tax change that quietly reshaped the numbers on buy-to-let — and a lot of landlords still don't fully realise how it affects them. Here's what changed and why it matters.

What Section 24 changed

It used to be that landlords could deduct their mortgage interest as a straightforward expense before working out their taxable rental profit. Section 24 removed that. Now, individual landlords can no longer deduct finance costs (mortgage interest and similar) from their rental income in the normal way. Instead, you get a tax credit worth 20% of your finance costs — the basic-rate reduction.

Why it stings for higher-rate taxpayers

For a basic-rate taxpayer, the 20% credit roughly matches the old relief, so the impact is limited. The problem is for higher-rate taxpayers. Because your full rental income now counts toward your taxable income (with only a 20% credit for interest, not full deduction), two things can happen: you're taxed on rental "profit" that your mortgage has largely eaten, and the extra income can push you into a higher tax band. Some landlords end up paying tax on properties that are barely breaking even in cash terms.

Who it affects

Section 24 applies to individual landlords of residential property with finance costs. It does not apply in the same way to companies — a limited company can still deduct mortgage interest against its profits in the normal way. That difference is a big part of why some landlords look at holding property through a company.

The options landlords consider

Incorporating — holding property in a limited company, where interest is still deductible. But transferring existing property into a company can trigger Capital Gains Tax and Stamp Duty, so it's rarely a simple win and needs the numbers run carefully.
Reviewing the portfolio — whether every property still makes sense after tax, and whether the borrowing is structured efficiently.
Ownership between spouses — how property is owned between a couple can affect the overall tax, depending on your respective tax bands.

None of these are one-size-fits-all, and the wrong move can cost more than it saves — incorporation especially. This is very much a "check before you act" area.

Get your position modelled properly

Section 24 is exactly the kind of thing where a bit of proper advice pays for itself, because the right structure depends on your income, your portfolio and your plans. We help landlords understand their real after-tax position and weigh the options without the sales pitch. Our landlord tax guide covers what else you can claim, and if Section 24 is biting, a conversation is the sensible next step.