What is Section 24?
Section 24 is the usual shorthand for the residential property finance-cost restriction introduced by the Finance (No. 2) Act 2015. Since 2020/21, individuals generally cannot deduct restricted residential finance costs when calculating property profit. Instead, qualifying costs may produce a basic-rate Income Tax reduction, subject to limits.
For 2026/27, this tool uses 20.0% from the shared UK tax-year rules. It is not a deduction at your highest tax rate, and it does not reduce adjusted net income for the Personal Allowance taper. The tool offers only 2025/26 and 2026/27: no later property-income rates are included.
How the three Section 24 limits work
- Calculate rental profit before finance costs: gross taxable receipts minus allowable non-finance expenses. A negative result is an ordinary property loss, not a finance-cost deduction.
- Use eligible ordinary losses brought forward from the same continuing business against its positive profit.
- Add current eligible residential finance costs to eligible unused costs brought forward.
- Compare that cost pool, property profit after losses, and adjusted total income above Personal Allowance. For the single business and simple income scope modelled here, the lowest non-negative amount qualifies.
- Multiply the qualifying amount by the UK basic rate. Cap the reduction at available Income Tax liability: relief cannot itself create a refund.
In this calculator, adjusted total income is other entered non-savings income plus taxable property profit, less the Personal Allowance calculated on that combined income. HMRC’s full calculation can include other loss reliefs and allowances. Savings and dividends are excluded from adjusted total income, but can affect the allowance and tax liability; they are not modelled here.
HMRC’s detailed calculation also apportions the income limit between separate businesses where necessary. Do not merge UK and overseas businesses, partnership businesses or estate income into this single-business estimate.
Which finance costs qualify — and why capital does not
The restriction can cover interest on mortgages and other borrowing for the residential property business, fees for obtaining or repaying loans, and discounts, premiums and disguised interest. The underlying cost must otherwise meet the rules for a deductible business finance cost. An item does not qualify simply because it appears on a mortgage statement.
Capital repayments repay the borrowed principal; they are not interest or qualifying finance costs. Use the interest portion of a repayment mortgage, not the entire payment. Private borrowing, capital expenditure and mixed residential/commercial use need careful classification and apportionment. Check HMRC’s scope and finance-cost guidance.
Who is affected — and who needs a different calculation?
This tool covers an individual’s taxable share of one continuing UK residential property business using actual expenses. It does not establish ownership or eligibility. Individual partners can be subject to the restriction too, but partnership businesses must be assessed separately; partnership allocation is outside this tool.
Companies and wholly non-residential property have different finance-cost treatment and must not use this result as their tax relief. Trusts, estates, non-residence, overseas property, Rent a Room, property allowance elections, unusual loss claims, cessation and mixed-use loans require separate guidance. Joint owners should enter only their confirmed taxable share, not assume that ownership is always split equally.
Worked mortgage interest tax relief examples
2026/27, England/Wales/Northern Ireland, actual expenses, no savings, dividends or personal reliefs. Every figure below is generated by the same engine as the form. Figures are annual and are not final Self Assessment bills.
| Scenario & inputs | Costs available | Profit after losses | Income above allowance | Reduction / costs carried forward |
|---|---|---|---|---|
| Finance costs are the limit £18,000.00 / £2,000.00 / £8,000.00 / £0.00 / £0.00 / £35,000.00 | £8,000.00 | £16,000.00 | £38,430.00 | £1,600.00 / £0.00 |
| Property profit is the limit £18,000.00 / £2,000.00 / £20,000.00 / £2,000.00 / £0.00 / £35,000.00 | £22,000.00 | £16,000.00 | £38,430.00 | £3,200.00 / £6,000.00 |
| Income above allowance is the limit £16,000.00 / £2,000.00 / £10,000.00 / £0.00 / £0.00 / £0.00 | £10,000.00 | £14,000.00 | £1,430.00 | £286.00 / £8,570.00 |
| Brought-forward losses reduce the limit £18,000.00 / £2,000.00 / £8,000.00 / £2,000.00 / £12,000.00 / £35,000.00 | £10,000.00 | £4,000.00 | £26,430.00 | £800.00 / £6,000.00 |
In the income-limited example, eligible finance costs are £10,000.00, but only £1,430.00 qualifies this year because income above the allowance is lower. Multiplying all the mortgage interest by the basic rate would overstate immediate relief.
Carry-forward: finance costs are not property losses
Eligible finance costs unused because the profit or adjusted-income limit restricts relief may carry forward within the same continuing business. The calculator shows available costs minus the qualifying basis. Add the eligible closing balance to next year’s current costs and reapply that year’s limits; relief is not guaranteed next year.
Ordinary property losses are a separate balance used against future profits of the same business. They can reduce the property-profit limit before finance costs are considered. Neither an outstanding mortgage balance nor a negative bank balance is an unused finance-cost balance.
A tax-liability cap is different from the three finance-cost limits. In Scotland, the UK-basic-rate reducer can exceed starter-rate tax; the calculator prevents negative combined Income Tax. A capped-off tax reduction does not itself create extra finance costs to carry forward.
What this estimate does not compare
We do not show an invented “before Section 24” bill. Deducting interest would also change taxable income, bands and potentially Personal Allowance, while historic rates and rules differ. For current overall rental tax and cash flow, use the Landlord & Rental Income Tax Calculator. Mortgage capital still needs to be considered separately for cash planning.
For record preparation, the guide to turnover, profit and income figures separates gross rent from taxable profit. Gross qualifying rent, not the Section 24 basis, matters for the MTD Income Tax start-date checker. Browse the calculator hub for other tasks.
Section 24 questions
Is mortgage interest tax relief always interest multiplied by 20%?
No. For 2026/27, the UK basic rate is 20.0%, but it applies to the lowest of eligible finance costs, property profits after ordinary brought-forward losses, and adjusted total income above Personal Allowance. The resulting reduction is also capped at Income Tax liability. Low profits or income can leave finance costs to carry forward.
Can I claim mortgage capital repayments?
No. Repaying borrowed capital is not a qualifying finance cost and does not generate Section 24 relief. On a repayment mortgage, separate the eligible interest from the capital portion. The loan balance and the total monthly payment are not the interest input.
What happens to unused mortgage interest?
Eligible costs not relieved because of the property-profit or adjusted-income limits can be carried forward within the same continuing property business. Add the eligible balance from your tax records to current-year costs next year and reapply the limits. Property losses are a separate pool. A tax-liability cap does not itself turn an unused tax reduction into additional carried-forward costs.
Does Section 24 apply to limited companies or commercial property?
This individual residential calculation must not be applied to a limited company or wholly non-residential property. Their finance-cost rules differ. Mixed-use loans need correct allocation. Trusts and estates have special rules; this tool does not model them.
Can I use the property allowance with this calculator?
No. This tool assumes actual allowable non-finance expenses and no property allowance election. Claiming the property allowance changes finance-cost relief treatment and can interact with opening losses and unused costs. Use the broader landlord calculator to explore its supported allowance cases, then check eligibility with HMRC.
What if I also have savings, dividends or pension relief?
They are outside this calculator’s scope. Savings and dividends are excluded from the adjusted-total-income limit but can still affect Personal Allowance and overall liability. Pension contributions, Gift Aid, other losses and tax reductions can also change the outcome. Do not enter them as salary or assume that omitting them gives your final tax result.
Does this support Scotland or 2027/28?
It supports 2025/26 and 2026/27, using the shared Scottish non-savings bands for Scottish taxpayers and the UK basic rate for finance-cost relief. No 2027/28 calculation is offered; later property-rate changes are not applied to the years shown.
Official sources & calculation scope
Sources checked 31 October 2026 by SoloCalc. The calculator reuses the tested property and Income Tax engines, with no National Insurance on ordinary rental income. Amounts use pounds and pence with tax results rounded to pennies; HMRC return rounding can differ. HMRC’s linked case studies contain historic tax bands and allowances, not the current-year figures used above.
- HMRC PIM2058: finance-cost reduction calculation and separate businesses
- Tax on rental income
- Rental income and allowable expenses
- Residential finance-cost relief: calculation and case studies
- HMRC Property Income Manual: finance-cost restriction
- Income Tax rates and Personal Allowance
- Scottish Income Tax
- HMRC: ordinary property losses carried forward
- Income Tax Act 2007: tax reduction cannot exceed liability
Information and estimates only, not tax advice or an HMRC determination. Confirm costs, ownership, carry-forward records and relief interactions with HMRC or a qualified adviser. Savings, dividends, pension contributions, Gift Aid, other personal reliefs, other tax reducers and PAYE credits are excluded; the result is not your final bill.