Section 24 is the single biggest tax change affecting UK landlords in a generation. Since April 2020, individual landlords no longer deduct mortgage interest from rental income — they receive a flat 20% basic-rate tax credit instead (rising to 22% from April 2027). For higher-rate and additional-rate landlords this can push effective tax rates on rental income above 60%, especially in the £100,000-£125,140 income band where the personal allowance tapers away. This multi-year calculator projects the widening wedge between your cash profit and your taxable profit as rents and rates rise, year by year.
Section 24 BTL Tax Calculator
The mortgage interest restriction over a full horizon. Watch how the wedge between cash profit and taxable profit widens as rents and rates rise — and the moment your effective tax rate breaks 40% (or 60% in the PA-taper zone).
From 6 April 2027 — separate property income tax rates (22% / 42% / 47%)
Spousal income shifting (Form 17) — underused tool
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Cumulative impact
After-tax cash (10y)
£32,767
Rental tax paid
£52,347
Cost of Section 24 vs pre-2017
£18,302
Cash vs taxable profit divergence
The signature S24 visual. Shaded wedge = tax on profit that never reached your wallet.
Year-by-year table
| Year | Rent | Expenses | Interest | Tax | Cash profit | After-tax | Eff. rate |
|---|---|---|---|---|---|---|---|
| 1 | £18,000 | £3,000 | £8,000 | £4,400 | £7,000 | £2,600 | 62.9% |
| 2 | £18,450 | £3,060 | £8,080 | £4,686 | £7,310 | £2,624 | 64.1% |
| 3 | £18,911 | £3,121 | £8,161 | £4,836 | £7,629 | £2,793 | 63.4% |
| 4 | £19,384 | £3,184 | £8,242 | £4,991 | £7,958 | £2,967 | 62.7% |
| 5 | £19,869 | £3,247 | £8,325 | £5,149 | £8,297 | £3,147 | 62.1% |
| 6 | £20,365 | £3,312 | £8,408 | £5,313 | £8,645 | £3,332 | 61.5% |
| 7 | £20,874 | £3,378 | £8,492 | £5,480 | £9,004 | £3,524 | 60.9% |
| 8 | £21,396 | £3,446 | £8,577 | £5,652 | £9,373 | £3,721 | 60.3% |
| 9 | £21,931 | £3,515 | £8,663 | £5,829 | £9,753 | £3,924 | 59.8% |
| 10 | £22,480 | £3,585 | £8,749 | £6,011 | £10,145 | £4,134 | 59.2% |
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Related guides
Plain-English explainers for the rules behind this calculator.
Frequently asked questions
Answers to the questions UK property investors most often have about this tool and the underlying rules.
- What is Section 24 in plain English?
- Section 24 of the Finance Act 2015 restricts mortgage interest relief for individual UK landlords. From April 2017 to April 2020 it was phased in. Today, you cannot deduct mortgage interest from rental income to reduce your taxable profit — you receive a flat 20% "tax reducer" instead, equivalent to basic-rate relief regardless of your actual marginal tax rate. A higher-rate landlord paying 40% effectively loses 20p in the pound on every pound of mortgage interest compared to pre-2017.
- Who is affected by Section 24?
- Individual UK landlords with mortgaged residential rental properties. Limited companies (SPVs) are not affected — they can still deduct mortgage interest in full from corporation-tax profits. Furnished Holiday Lettings were also exempt until the regime was abolished on 6 April 2025.
- How does the personal-allowance taper interact with Section 24?
- Between £100,000 and £125,140 of adjusted net income, the £12,570 personal allowance is reduced by £1 for every £2 over £100,000. This creates an effective marginal rate of around 60% in this band. When Section 24 pushes a landlord into this band (because rental income is added to their other income with no deduction for interest), the cash impact can be punitive — easily wiping out the rental cash flow entirely.
- What changes in April 2027?
- Autumn Budget 2025 introduced a separate property-income tax schedule from 6 April 2027: 22% / 42% / 47% (a +2pp uplift over the equivalent earned-income rates). The Section 24 reducer steps up correspondingly from 20% to 22%. This calculator applies the new rates automatically from year 2 onwards in multi-year projections.
- Can I avoid Section 24 by incorporating?
- Companies don't face Section 24. But incorporation triggers SDLT on the deemed market-value transfer (with the +5% surcharge) and CGT on the deemed disposal. Section 162 incorporation relief (TCGA 1992 s162) can defer the CGT if you can evidence "business" status under the Ramsay test — HMRC has tightened scrutiny here from 6 April 2026. Use our Personal-vs-Limited-Company and Portfolio Incorporation Cost calculators to model the break-even.