Section 24 Mortgage Interest Tax Relief Calculator
Since Section 24 of the Finance (No. 2) Act 2015 fully took effect, landlords can no longer deduct mortgage interest from rental income before tax. Instead, you get a 20% tax credit on finance costs. This calculator compares what you’d owe under the old fully-deductible rules against what you actually owe now.
What Section 24 changed
Before 2017, an individual landlord deducted mortgage interest from rental income like any other expense and paid tax on the remainder. The Finance (No. 2) Act 2015 phased that out between 2017 and 2020. Since April 2020, finance costs are not deductible at all: you calculate rental profit without them, then receive a tax credit worth 20% of the finance costs, per HMRC’s guidance. For a basic-rate taxpayer the credit often matches the old deduction. For higher-rate taxpayers it does not, which is the gap this calculator shows.
The band effect
Because profit is now calculated before finance costs, your taxable income figure is higher than it used to be even when the final bill is softened by the credit. That higher figure is what counts toward the £50,270 higher-rate threshold and other income-linked limits, so the restriction can change your band even when the credit covers most of the interest.
General rules, not advice
The restriction applies to individuals and partnerships letting residential property. Companies deduct interest as a business expense and are outside Section 24 entirely, which is why incorporation gets discussed so often. Whether it helps in your case depends on stamp duty, capital gains, mortgage pricing, and how long you plan to hold: that is a conversation for a qualified accountant, not a calculator.
Frequently asked questions
What is the Section 24 mortgage interest restriction?+
Since April 2020, individual landlords cannot deduct mortgage interest or other finance costs from rental income when calculating taxable profit. Instead, you receive a tax credit worth 20% of those finance costs. The restriction was introduced by the Finance (No. 2) Act 2015 and phased in from 2017.
Who is affected by Section 24?+
Individual landlords and partnerships letting residential property. Companies are not affected: a company deducts interest as a normal business expense and pays corporation tax on the result.
Can Section 24 push me into a higher tax band?+
It can. Because rental profit is now calculated before deducting finance costs, your taxable income figure is higher even though the 20% credit reduces the final bill. That higher figure is what counts toward the higher-rate threshold and other income-linked limits. The calculator shows the effect for the numbers you enter.
Should I move my properties into a limited company?+
That is an individual tax planning decision this tool does not make. Incorporation changes stamp duty, capital gains tax, mortgage pricing, and administration, and the right answer depends entirely on your circumstances. Speak to a qualified accountant before restructuring.
This calculator is for guidance only and does not constitute tax advice. Always verify with HMRC or a qualified accountant.
STEMHQ tracks rent received, expenses, and finance costs per property year-round, so your Section 24 position and self-assessment figures are ready when you need them.
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