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Tax · 2026/27 vs 2027/28

What your rental keeps after Section 24

From 6 April 2027 rental profit gets its own tax rates of 22%, 42% and 47%. See what that does to one property.

Your income
The property
Interest-only mortgage
Running costs

Example figures for a London flat. Put in your own.

You keep in 2027/28, after tax–
Gross yield–
Net yield–after running costs
Per month–after tax

Where the rent goes

This year and next

2026/272027/28
Section 24 costs you in 2027/28–

Compare with a limited company → Stamp duty on a £425,000 purchase →
Your real bill may differ

Your tax depends on all your income, losses carried forward, allowable costs and any reliefs. Use this as a guide and check your figures with an accountant or your Self Assessment return. Terms of use

Assumes one property owned personally in England or Northern Ireland, frozen thresholds (£12,570 allowance, £50,270 higher rate, £125,140 additional rate) and the allowance taper above £100,000.

From 2027/28 your personal allowance is set against salary first. Mortgage interest isn't deducted from profit; it earns a credit at the basic property rate. Interest that can't be relieved carries forward. This is an estimate, not tax advice.

What Section 24 does

Landlords who own property in their own name can't deduct mortgage interest from rental profit. Instead they pay tax on the full profit and get a credit worth the basic rate of tax on their interest. For higher-rate taxpayers that means paying tax on money that went straight to the lender.

What changes on 6 April 2027

Rental profit gets its own tax rates of 22%, 42% and 47%, two points above the rates on wages. The mortgage interest credit rises to 22%. Your personal allowance is also set against your salary first, so more of your rental profit is taxed.

Worked example

A higher-rate taxpayer with £20,000 of rental profit and £8,000 of mortgage interest pays 42% on the £20,000, which is £8,400. They get a 22% credit on the £8,000 of interest, which is £1,760, leaving £6,640 to pay. If interest were deductible like any other cost, they would pay 42% on £12,000, which is £5,040. Section 24 costs them £1,600 a year.

Watch the £100,000 line. Rental profit counts towards it, and above it you lose £1 of personal allowance for every £2 of income.

Questions landlords ask

Does Section 24 apply to limited companies?

No. Companies deduct mortgage interest as a normal cost and pay corporation tax on what's left. That's why many landlords compare the two. Use the limited company calculator to see your figures.

What happens to interest I can't get relief for?

If your credit is limited because your profit or income is too low, the unused interest carries forward to future tax years.

Does this apply in Scotland and Wales?

Section 24 applies across the UK. Scotland sets its own income tax bands, so this calculator uses the rates for England and Northern Ireland. Wales confirms its own property rates separately.

Does it cover holiday lets?

Yes, since April 2025. Furnished holiday lets lost their special treatment and now follow the same rules.

Sources

Last updated 1 October 2026.

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