What do Landlords need to know about Section 24?

Interest Relief for Landlords

September 20, 2023

Clause 24, also known as Section 24, is an amendment to the UK’s tax laws restricting landlords from deducting finance costs from their rental income.

The legislation gradually phased in from 2017 to 2020 means landlords cannot claim tax relief on mortgage interest, admin fees, loans for furnishings, or other costs incurred from borrowing funds.

It was introduced to stop the highest-earning landlords from claiming large amounts of tax relief and to help first-time buyers get on the property ladder.

Landlords now need to pay tax on the total amount of their rental income. Then, they can claim back finance costs up to the basic rate income tax rate of 20%.

Who does it apply to?

Clause 24 only applies to the following:

  • Buy-to-let (BTL) properties
  • Houses in Multiple Occupation (HMO)
  • Partnerships and LLPs
  • Individual landlords
  • Trustees

The rules do not apply to Furnished Holiday Lettings (including serviced accommodation if they meet the FHL rules), limited companies, commercial properties in mixed-use buildings, and property development and trading.

What loans does it apply to?

Clause 24 applies to any loans that are related to an applicable property, including:

  • Loans taken out to purchase residential property to let
  • Loans taken out to buy an interest in a property letting partnership
  • Existing mortgages and loans of a residential landlord

What costs does it apply to?

Section 24 applies to any finance cost related to the property. This includes mortgage interest and any incidental charges related to the loan.

What if I remortgage?

Remortgaging and withdrawing capital has been a common practice for those who own buy-to-let properties.

However, under section 24, the mortgage is limited to the original property value (including Stamp Duty Land Tax and related costs) plus any improvement costs. In other words, you cannot deduct loan interest above the original purchase price.


Your rental income is £15,000, and your mortgage interest is £5,000.

Under clause 24, you’ll need to pay tax on the total amount of your rental income – this amounts to £3,000 if you’re a basic rate (20%) taxpayer.

You can reclaim 20% of your mortgage interest under the finance cost allowance, which amounts to £1,000.

It’s important to note that you can deduct 20% of the lower of:

  1. Finance costs not deducted from income, or
  2. The profits of the property business, or
  3. The adjusted total income.

Therefore, you’ll pay a total of £2,000 ointax on your rental income (£3k – £1k).

About the Author

Jason Seagrave is the founder of Seagrave French and has been advising business clients for 35 years. He is never happier than when helping ambitious clients transform their businesses.

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