Section 24 Tax Impact Calculator

The Section 24 Tax Impact Calculator shows UK landlords how mortgage interest relief restrictions affect their rental income tax. Section 24 phased out the ability to deduct mortgage interest as an expense, replacing it with a 20% tax credit. Our calculator compares old vs new rules and shows potential savings through limited company ownership.

Section 24 (Finance Act 2015) changed mortgage interest tax relief for UK landlords: **Old Rules (Pre-2017)**: Mortgage interest was fully deductible from rental income before calculating tax. If you earned £20,000 rent with £12,000 interest and £3,000 other costs, your taxable profit was £5,000. **New Rules (Section 24)**: Mortgage interest is NO LONGER deductible. Instead, you get a 20% tax credit on the interest. Using the same example, your taxable profit is now £17,000 (rent minus other costs only), taxed at your marginal rate, then you claim back 20% of the £12,000 interest (£2,400 credit). **Impact**: Higher and additional rate taxpayers lose significantly because they're taxed at 40-45% on the full profit but only get 20% relief. This can push landlords into higher tax bands and make previously profitable properties cashflow negative. **Limited Company Alternative**: Properties held in limited companies avoid Section 24 entirely, as companies can still fully deduct mortgage interest. However, you'll pay corporation tax and potentially dividend tax when extracting profits.