What is Section 24 and how does it affect UK landlords?

Section 24 of the Finance (No. 2) Act 2015 prevents individual landlords from deducting mortgage interest from rental income to calculate taxable profit. Instead, landlords pay tax on the gross rental profit (rent minus operating expenses) and receive a basic rate (20%) tax reduction on their mortgage interest. This heavily penalizes higher and additional rate taxpayers.

Is it better to hold Buy-to-Let property personally or in a Limited Company (SPV)?

For higher (40%) and additional (45%) rate taxpayers, buying property through a Limited Company Special Purpose Vehicle (SPV) is often more tax-efficient because companies can deduct 100% of mortgage interest as a business expense before Corporation Tax (19% to 25%). However, buy-to-let mortgage interest rates and setup costs for limited companies can be slightly higher.

What is the Stamp Duty (SDLT) surcharge on Buy-to-Let property?

Following the Autumn Budget on 30 October 2024, the Higher Rates for Additional Dwellings (HRAD) stamp duty surcharge was increased from 3% to 5% on purchases of additional residential properties and buy-to-let investments in England and Northern Ireland.

Section 24 Restricted Autumn 2024 5% SDLT 100% Private (Client-Side)

UK Buy-to-Let (BTL) & Section 24 Landlord Tax Calculator

Model your rental cash flow, net yields, and the exact financial impact of Section 24 mortgage interest relief restrictions (20% basic rate tax credit). Includes the Autumn Budget 5% SDLT surcharge and a direct side-by-side comparison between Personal Ownership and a Limited Company SPV.

Quick Scenarios:

Property & Finance

75% LTV

Property Purchase Price (£)

Monthly Expected Rent (£)

BTL Mortgage Borrowing (£)

Mortgage Interest Rate (% p.a.)

Modeled as interest-only monthly debt service

Operating Costs & Personal Tax Band

Allowable Deductions

Letting Agent Fee (% of rent)

Insurance & Maintenance (£/yr)

Landlord's Other Taxable Income (Salary/Pension) Higher Rate (40%)

Determines whether Section 24 pushes you into 40% or 45% tax bands

Personal Name vs Limited Company SPV

Structure	Tax Deductible Interest?	Annual Tax	Net Cashflow / yr
Personal Name (Section 24)	❌ Only 20% Tax Credit	£4,775	£1,650
Limited Company (SPV)	✔ 100% Tax Deductible	£1,221	£5,204

Net Cash In Hand

Annual Net Profit

Post-Section 24

£1,650

Monthly Net: £138 / mo

•

HMRC Tax Due: £4,775

Gross Rental Yield: 6.34%

Autumn 2024 SDLT (5%): £25,000

Gross Annual Rent: £22,200

Allowable Operating Costs: -£3,720

Section 24 Taxable Profit: £18,480

Gross Tax before Relief: £7,392

Less 20% Finance Credit: -£2,625

Final Net Tax Payable: £4,767

Frequently Asked Questions

Clear answers regarding Section 24 restrictions, rental yields, and BTL tax planning.

Why does Section 24 cause landlords to pay tax on loss-making properties? ▼

Because mortgage interest is excluded from costs, HMRC taxes your turnover rather than actual cash profit. If you collect £15,000 rent and pay £14,000 in mortgage interest, your real cash profit is £1,000. However, HMRC treats your taxable profit as £15,000. At higher rate tax (40%), gross tax is £6,000 minus a £2,800 credit (20% of £14,000), leaving a tax bill of £3,200—exceeding your actual cash profit and turning a positive investment into a cash loss!

What was the Autumn Budget 2024 Stamp Duty change for landlords? ▼

Chancellor Rachel Reeves increased the Higher Rates for Additional Dwellings (HRAD) surcharge from 3% to 5% with immediate effect from 31 October 2024. This applies an extra 5% tax across all Stamp Duty bands for buy-to-let properties and second homes.

How does a Limited Company SPV bypass Section 24? ▼

Section 24 applies strictly to individuals, partnerships, and trusts—it does NOT apply to limited companies. A corporate entity treats 100% of mortgage interest as a standard business operating expense, deducting it fully before Corporation Tax (19% to 25%) is assessed.