Residential landlords · Section 24
What tax will you pay on your rental income?
Since 2020, you can no longer deduct mortgage interest from your rent before tax — you get a flat 20% credit instead. For a higher-rate landlord that quietly costs thousands a year. Put your numbers in and see exactly what Section 24 is doing to your tax bill.
Your rental year
One property or your whole portfolio — enter the annual totals. Nothing is sent anywhere; this runs entirely in your browser.
What Section 24 actually changed
Before 2017, mortgage interest was a normal business expense: you subtracted it from your rent and paid tax on what was left. A higher-rate landlord got 40% relief on every pound of interest. Section 24 phased that out. From the 2020/21 tax year onwards, interest is not deductible at all — instead you get a tax reducer worth 20% of your interest, whatever your tax band.
The sting is in the arithmetic. Because your interest is no longer taken off first, your taxable rental profit is higher — high enough that it can push an otherwise basic-rate landlord into the 40% band, taper away the personal allowance, or tip you over the £50,270 line for the High Income Child Benefit Charge. The 20% credit rarely puts all of that back.
The 20% credit is capped
Your reducer is 20% of the lowest of three figures: your finance costs, your property profit, or your income above the personal allowance. In a low-profit or loss-making year, part of the relief simply can't be used this year — it carries forward instead. The calculator above flags when that's happening to you.
The rules in short
- Applies to residential lettings held personally (and in partnerships) — not to furnished holiday lets on the old rules, and not to companies
- Mortgage interest is 0% deductible; you get a 20% basic-rate tax reducer instead
- The reducer is 20% of the lowest of: finance costs, property profits, or adjusted total income
- Unused relief in a low-profit year is carried forward to set against future property profits
- Rental profit carries Income Tax but no National Insurance
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Common questions
Can landlords still deduct mortgage interest?
No. Since the 2020/21 tax year you can't deduct any mortgage or finance interest from your rental income before tax. Instead you get a basic-rate tax reducer worth 20% of your interest, whatever your tax band.
What is Section 24?
Section 24 of the Finance Act 2015 is the rule that replaced full mortgage-interest relief with the flat 20% tax credit for individual residential landlords. It was phased in between April 2017 and April 2020.
Does Section 24 affect basic-rate taxpayers?
If all your income stays inside the basic-rate band you're broadly no worse off, because your relief and your tax rate are both 20%. The real cost falls on higher-rate landlords — and because your interest is added back to your profit, Section 24 can push an otherwise basic-rate landlord into the 40% band.
Does Section 24 apply to limited companies?
No. Companies still deduct mortgage interest as a normal business expense, which is one reason some landlords incorporate. This calculator is for residential property held personally.
Do I pay National Insurance on rental income?
No. Rental profit is subject to Income Tax but not Class 2 or Class 4 National Insurance.
Model it properly before you buy — or refinance
Seeing this year's number is one thing. The real questions are whether a property still stacks up after Section 24, and what happens if your rate goes up again. That's exactly what our Rental ROI calculator is built for.
- Rental Property ROI & Yield Calculator — net yield and real return after Section 24, with a mortgage-rate stress test.
- Self Assessment Tax Estimator 2026/27 — your whole bill, rent plus any other income, in one place.
- Freelance Day-Rate & Profit Calculator — for the landlords who freelance too.
- Invoice Tracker & Log — auto paid/outstanding/overdue, with a chase list.
Excel and Google Sheets. Working formulas, not just formatting. Built and checked by us, with AI assistance, and every calculation verified.
Get the Rental ROI calculator — £9 →£9 on its own, or all four tools for £19, with a 14-day money-back guarantee.