Section 24 landlord tax calculator
Individual landlords cannot deduct mortgage interest from rental profit. They get a tax credit of 20% of it instead. This works out what that means for you at 2026/27 rates, and compares owning the same property through a company.
How this is calculated
Rental profit for an individual is rent less allowable costs, with no deduction for mortgage interest. It is added to your other income and taxed at your rates, so it can push part of your income into a higher band and reduce your personal allowance above £100,000.
A tax credit of 20% is then given on the lowest of the mortgage interest, the rental profit, and your total income above the personal allowance. Any credit that cannot be used is carried forward to the next year.
For the company comparison, the interest and company costs are deducted before corporation tax at 19% to 25% with marginal relief. The remaining profit is assumed to be paid out as dividends on top of your other income, using the dividend allowance and dividend rates.
National Insurance does not apply to ordinary rental income and is not included.
Rates and assumptions used
| Personal allowance | £12,570, tapered above £100,000 |
| Basic, higher and additional rate | 20%, 40%, 45% |
| Finance cost credit | 20% of qualifying interest |
| Corporation tax | 19% to £50,000, 25% from £250,000 |
| Dividend allowance | £500 |
| Dividend rates | 10.75%, 35.75%, 39.35% |
Statutory rates last checked July 2026. Source: HMRC and gov.uk.
Worked example
A higher rate taxpayer earning £55,000 lets a property for £14,400 a year with £3,000 of costs and £8,000 of mortgage interest. The £11,400 rental profit is taxed at 40%, which is £4,560, less a £1,600 credit, so the tax is £2,960. That leaves £440 a year after the mortgage and tax, and the tax is 87% of the £3,400 left after interest. With full interest relief the tax would have been £1,360. A basic rate taxpayer with £20,000 of other income pays £680 on the same property, the same as before Section 24.
Common questions
Does Section 24 apply to limited companies?
No. A company deducts its mortgage interest as a business cost before corporation tax. The trade-off is that money taken out of the company is taxed again, usually as dividends, and company mortgages often cost more.
Should I move my properties into a company?
Moving property you already own into a company is normally treated as a sale at market value, which can mean capital gains tax and stamp duty. Some relief may apply in specific circumstances. Get advice from a tax adviser before doing anything.
Why is my tax higher than 20% of the profit after interest?
Because the full rental profit is taxed at your marginal rate, often 40%, and the interest only earns back 20%. For a higher rate taxpayer, that gap is the cost of Section 24.
What about Scotland?
Scottish income tax rates apply to rental income for Scottish taxpayers, but the finance cost credit is still 20%. Dividends are taxed at UK rates wherever you live.
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