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Landlord Profitability Checker

Thinking of buying a Buy-to-Let? Or already an accidental landlord? Use this tool to see the devastating impact of Section 24 on your actual take-home profit.

What is Section 24?

Introduced in 2017 and fully phased in by 2020, Section 24 of the Finance Act 2015 stopped private landlords from deducting mortgage interest from their rental income before calculating tax.

Instead, landlords now receive a basic rate tax credit (20%) on their interest payments. For Higher Rate and Additional Rate taxpayers, this mismatch means you pay 40% or 45% tax on income that you don't actually get to keep (because it goes to the bank).

  • The Triple Threat:
  • Higher Tax Bills: Your taxable income appears artificially higher.
  • Tax Band Trap: This artificial income can push you into the Higher Rate (40%) bracket unexpectedly.
  • Lost Allowances: If it pushes you over £100k, you lose your Personal Allowance. If over £50k (adjusted), you lose Child Benefit.

How to Beat Section 24?

The most common way to mitigate Section 24 is by using a Limited Company (SPV) structure for your property portfolio.

Limited Companies are exempt from Section 24. They can still deduct 100% of mortgage interest as a business expense. However, moving existing properties into a company can trigger Capital Gains Tax and Stamp Duty. You should always consult a specialist tax advisor.

Frequently Asked Questions

Can I deduct mortgage interest on buy-to-let?

Not directly. Individual landlords can no longer deduct finance costs from their rental income. Instead, you receive a basic rate tax reduction (20% tax credit) on the interest payments.

Does Section 24 apply to Limited Companies?

No. Section 24 only applies to individuals. Limited Companies (SPVs) can still deduct 100% of their mortgage interest and finance costs as a business expense before paying Corporation Tax.

What expenses can I still claim?

You can still deduct 'allowable expenses' such as letting agent fees, property maintenance, council tax, landlord insurance, and accountancy fees from your rental income.