UK Section 24 Landlord Calculator 2026/27

Worked scenarios for 2026/27

• Basic-rate landlord (£20k other income)
  +£0/year
  Effective 12.0% on £10,000 profit - credit £800
• Higher-rate, single BTL (£60k other income)
  +£1,600/year
  Effective 30.0% on £16,000 profit - credit £1,600
• Higher-rate, geared portfolio (£70k income)
  +£3,800/year
  Effective 29.0% on £31,000 profit - credit £3,600
• 60% trap (£95k other + £20k rental)
  +£2,000/year
  Effective 48.9% on £18,000 profit - credit £1,000
• Additional-rate landlord (£160k income)
  +£3,000/year
  Effective 35.8% on £26,000 profit - credit £2,400
• Scottish higher rate (42% above £43,662)
  +£2,380/year
  Effective 33.3% on £21,000 profit - credit £2,000

What is Section 24?

Section 24 of the Finance (No. 2) Act 2015, extended by section 26 of the Finance Act 2016, is the provision that progressively removed full income tax relief on mortgage interest and other finance costs for individual landlords of UK residential property. The rules sit at sections 272A-272B and 274A-274C (including s.274AA) of the Income Tax (Trading and Other Income) Act 2005 (ITTOIA 2005). HMRC’s technical guidance starts at PIM2054, and the worked method is in HMRC’s guidance on how the tax reduction is worked out.

Before April 2017, residential landlords could deduct mortgage interest - along with repairs, agent fees, insurance, and other allowable expenses - from rental income to arrive at the taxable property profit. That profit was then taxed at the landlord’s marginal income tax rate, so the effective relief on interest matched the marginal rate.

Section 24 phased this out over four tax years (per HMRC’s guidance above):

• 2017/18: 75% deductible, 25% given as a basic-rate tax reduction
• 2018/19: 50% deductible, 50% as a basic-rate tax reduction
• 2019/20: 25% deductible, 75% as a basic-rate tax reduction
• 2020/21 onwards: 0% deductible, 100% as a basic-rate tax reduction

This calculator models the steady-state post-2020 rules across all supported tax years - the phase-in window is historical only.

From 2027/28 the reduction is given at the new property basic rate rather than the basic rate: Finance Act 2026 Sch. 1 para. 40 substitutes “property basic rate” into the formula in ITTOIA 2005 s.274AA(5). For 2026/27, the year this page covers, the reduction is 20%.

How the post-2020 rules work

Under the current rules, the tax calculation for an individual residential landlord follows three steps:

1. Compute property profit gross of interest: rental income minus all allowable expenses EXCEPT mortgage / finance costs. This figure is added to your other taxable income (salary, self-employment, pensions) and Income Tax is charged at your marginal rate.
2. Calculate the basic-rate tax reduction: 20% of the LOWER of three numbers - (a) finance costs not deducted in the year plus any brought forward, (b) the property business profits for the year (after brought-forward losses), and (c) “adjusted total income”: income after losses and reliefs, excluding savings and dividend income, that exceeds your Personal Allowance.
3. Subtract the reduction from the Income Tax liability computed in step 1. The reduction cannot create a refund. Where it was limited by (b) or (c), the unrelieved finance costs are carried forward to the following years.

This calculator measures (c) after the Personal Allowance you actually get, so it follows the taper above £100,000, and it assumes you have no savings or dividend income. It has no boxes for finance costs or losses brought forward from earlier years, so the figures above cover this year’s interest and profit only.

Worked example: higher-rate landlord, single property

A landlord with £60,000 employment salary owns a single buy-to-let generating £18,000 of annual rent. Expenses (insurance, agent, repairs) come to £2,000. Mortgage interest is £8,000. All figures below are 2026/27, England.

If interest were still deductible (pre-2017 rules):

• Property profit = £18,000 - £2,000 - £8,000 = £8,000
• Added to £60,000 salary = £68,000 total income, so the whole £8,000 slice sits in the higher-rate band: £8,000 × 40% = £3,200

Post-2020 rules (Section 24):

• Property profit (no interest deduction) = £18,000 - £2,000 = £16,000
• Added to £60,000 salary = £76,000 total income
• Tax on the £16,000 slice at 40% = £6,400
• Basic-rate reduction: £8,000 × 20% = £1,600
• Net Income Tax on property = £6,400 - £1,600 = £4,800

The landlord pays £1,600 more per year under Section 24 - 20% of the £8,000 interest, the gap between the 40% relief a deduction would have given and the 20% reduction actually given. While the whole rental slice stays in one band, every £100 of interest costs a 40% taxpayer £20 more, a 45% taxpayer £25 more, and a basic-rate (20%) taxpayer nothing extra.

Worked example: additional-rate landlord with portfolio

A consultant earning £160,000 owns three buy-to-let flats. Combined rental income is £72,000, expenses £10,000, mortgage interest £40,000.

If interest were still deductible:

• Property profit = £72,000 - £10,000 - £40,000 = £22,000
• Already in the additional-rate band: £22,000 × 45% = £9,900 of tax

Post-2020:

• Property profit = £72,000 - £10,000 = £62,000
• Tax at 45% = £27,900
• Basic-rate reduction: £40,000 × 20% = £8,000
• Net property tax = £27,900 - £8,000 = £19,900

Annual Section 24 cost: £10,000 - 25% of the £40,000 interest.

The £100k tax trap interaction

Because Section 24 forces rental profit to flow through gross of interest, it pushes more landlords into the £100,000-£125,140 Personal Allowance taper - where, in England, Wales and Northern Ireland, each £1 of additional income costs 60p of tax.

Consider a £90,000 salary landlord with a single BTL generating £20,000 of rent, £3,000 expenses, £6,000 interest:

• If interest were deductible: property profit £11,000, total income £101,000 - £1,000 into the taper.
• Post-2020: property profit £17,000, total income £107,000 - now £7,000 into the taper, with the 20% reduction (£1,200) only partially offsetting.

Section 24 costs this landlord £2,400 a year (2026/27 engine figure), double the 20% of interest a higher-rate landlord outside the taper would lose, because the extra £6,000 of taxable income is taxed at 60%. Landlords near £100k often look at pension contributions to bring adjusted net income back down; see the 60% tax trap guide.

Companies are outside Section 24

Section 24 applies to individuals (alone or in partnership), trustees and personal representatives; HMRC’s PIM2054 says companies carrying on a property business are not affected. A company deducts interest in computing its profits and pays Corporation Tax (19% to 25% in 2026/27, with marginal relief between £50,000 and £250,000) rather than Income Tax.

For the portfolio example above - £62,000 of pre-interest profit, £40,000 of interest - a company with no associated companies, letting to unconnected tenants (so not a close investment-holding company under CTA 2010 s.18N), would have taxable profit of £22,000, below the £50,000 lower limit, so Corporation Tax at the 19% small profits rate would be £4,180. That is not a like-for-like comparison with the individual’s £19,900: profit taken out of the company as dividends or salary is taxed again, and moving existing properties into a company is itself a taxable event. A transfer to a connected company is treated for Stamp Duty Land Tax as made at market value, Capital Gains Tax is due on any gain unless a relief applies, and the existing mortgages are in your own name. Take advice before acting on any comparison of this kind.

What “finance costs” means

PIM2054 says the restriction covers:

• Interest and other finance costs on loans taken out for a property business that lets residential property (a “dwelling-related loan”)
• Payments that are not called interest but are economically equivalent to it, including amounts within ITTOIA 2005 Part 4 Chapter 2A
• Incidental costs of obtaining the loan, such as fees or commission

Loans wholly for commercial property are not affected.

Other allowable expenses are deducted as normal, for example:

• Repairs and maintenance (not improvements)
• Insurance
• Letting agent and management fees
• Accountancy fees for the property business
• Ground rent and service charges

Furnished Holiday Lets - the carve-out that ended in 2025

Until 5 April 2025, loans for a commercially let Furnished Holiday Let (FHL) were outside the finance cost restriction. The FHL regime was abolished for Income Tax from 6 April 2025 (Finance Act 2025 Sch. 5), so from 2025/26 former FHLs are taxed under the ordinary property business rules and Section 24 applies to their finance costs.

Per HMRC’s policy paper on the abolition, new expenditure no longer qualifies for capital allowances (replacement of domestic items relief applies instead), although an existing FHL capital allowances pool can continue to be written down; and access to the trading-asset reliefs from tax on chargeable gains, including Business Asset Disposal Relief, roll-over relief and gift relief, ends, subject to transitional rules.

What this calculator does

Inputs you provide:

• Annual rental income - gross rent received from tenants for the year.
• Allowable expenses - everything EXCEPT mortgage / finance costs (repairs, agent, insurance, etc.).
• Mortgage interest - the finance cost subject to the restriction.
• Other income - salary, self-employment profit, pensions in payment, any other income that determines which marginal band your rental profit falls into.
• Region and tax year - England / Wales / NI vs Scotland (Scottish Income Tax has its own bands and rates).

What the calculator returns:

• Pre-S24 tax: what your total Income Tax bill would be if mortgage interest were still fully deductible.
• Post-S24 tax: your liability under the 20% basic-rate-reduction rules.
• Delta: the extra tax you pay each year because of Section 24 - positive numbers mean you pay more under the current rules.
• Effective landlord rate: the proportion of your rental profit (before interest) that goes to Income Tax.

See our methodology for how the site’s calculators are built.

Related guides

• UK Landlord Tax Guide - the full landlord tax stack including SDLT, CGT, and registration obligations.
• FHL Abolition Guide - the April 2025 changes to Furnished Holiday Lets.
• 60% Tax Trap - how rental profit interacts with the £100k Personal Allowance taper.
• Corporation Tax Calculator - what a company holding your portfolio would pay instead.

Related calculators

Other UK tax calculators that pair with the Section 24.

• Stamp Duty
• LBTT
• LTT
• Salary for mortgage
• Mortgage repayment
• Overpayment