What is Section 24?
Section 24 is the common name for the rule that stops individual landlords deducting mortgage interest and other finance costs from rental income. Instead you get a tax reduction worth 20% of those costs.
Why it matters to landlords
Basic rate taxpayers often see little change, but higher and additional rate landlords pay more, because they lose relief at 40% or 45% and get only 20% back. The rule can also push some landlords into a higher band, since profit is now measured before interest.
The rule applies to individuals and partnerships with residential property. Companies are not affected. The government has announced separate property income tax rates from April 2027, with the finance cost reduction moving to 22%.
Example
Rent £20,000, other costs £2,000, mortgage interest £8,000. Taxable profit is £18,000. A higher rate landlord owes £7,200, less a £1,600 reduction (20% of £8,000), so £5,600.