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Results update as you typeSection 24 removed finance costs as a deductible expense for individual landlords, replacing them with a basic-rate tax credit. For a higher-rate taxpayer with a mortgage, that change alone can decide whether a property makes money.
How the old treatment worked
Finance costs came off rental income before tax was calculated, so a higher-rate taxpayer effectively received 40% relief on mortgage interest. Taxable profit was rent minus all costs, interest included.
How it works now
Taxable profit is calculated before deducting finance costs, and a separate credit worth 20% of those costs is applied to the tax due. A basic-rate taxpayer is broadly unaffected; a higher-rate taxpayer loses half the relief they used to get.
The second-order effect
Because taxable profit is now higher, it can push you into a higher band, restrict the personal allowance above £100,000, or affect child benefit. The headline tax difference understates the impact for anyone near a threshold.
What this calculator does not model
Bands and thresholds, the personal allowance, other income, incorporation, or tapering. It compares two treatments of the same figures to show the direction and rough scale of the change. Confirm anything you act on with an accountant.
Frequently asked questions
Does Section 24 apply to limited companies?
No. Companies deduct finance costs as a normal business expense. That difference is the main reason incorporation comes up so often — though it brings its own costs and consequences that rarely make it into the comparison.
Is the 20% credit always worth 20% of my interest?
Not always. The credit is limited by your rental profits and by the tax you actually owe, so in a loss-making or low-profit year some of it can go unused.
What counts as a finance cost?
Mortgage interest, interest on loans to buy furnishings, and fees incurred in obtaining that finance. Capital repayments are not a cost and never were.
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These are indicative figures for planning, not tax advice. Confirm anything you act on with a qualified accountant.