What is HMRC Section 24?

Section 24 of the Finance Act 2017 restricts how much mortgage interest landlords can deduct from their rental income for tax purposes. Since 2020, landlords can only deduct 20% of their mortgage interest from their rental profits, rather than the full amount. Many landlords are still claiming the full deduction and are therefore underdeclaring their taxable income.

How does HMRC know if I have not declared my rental income correctly?

HMRC's Connect system cross-references data from multiple sources, including mortgage interest data reported by lenders on the Mortgage Interest Statistics form, with what landlords declare on their Self Assessment returns. This data has been collected for years, and HMRC is now actively using it to identify non-compliant landlords.

What is the voluntary disclosure window for Section 24?

HMRC has offered reduced penalties for landlords who come forward voluntarily to correct their tax position before HMRC contacts them. While the window has not officially closed, it is narrowing. The penalty difference between voluntary disclosure and HMRC finding the error first can be substantial, often the difference between a warning and a five-figure settlement.

I have multiple rental properties. Do they each have their own Section 24 exposure?

Yes. Section 24 applies to each property individually. If you have multiple rentals and have been deducting full mortgage interest on all of them, your total exposure could be significantly higher than for a single property. Each property's mortgage interest must be calculated separately under the Section 24 rules.

Can I appeal against a HMRC penalty for Section 24?

You may be able to appeal if you have a reasonable excuse, such as relying on professional advice from a qualified adviser. However, the grounds for appeal are narrow. The best approach is to put your affairs in order before HMRC contacts you. A specialist property tax adviser can help you understand your position and potentially make a voluntary disclosure on the most favourable terms.

How do I find a tax adviser who specialises in property landlords?

Look for an accountant or tax adviser who specifically works with residential landlords and understands Section 24, furnished holiday letting rules, and property income taxation. The Association of Taxation Technicians (ATT) and the Chartered Institute of Taxation (CIOT) have member directories you can search. Ask specifically about their experience with landlord tax when you make contact.

Educational use only: This platform provides information for educational purposes and should not be considered financial, investment, or legal advice.

May 11, 2026 Syd Lawrence

The Double Squeeze: What Happens When Your Property Falls AND HMRC Comes Knocking

Two pressures. One combined result.

Syd Lawrence

CEO & Co-founder at Delphina

Syd got fed up with being kept confused by the UK personal finance industry. So he built the tool he wished existed. Qualified to provide financial advice, prefers to provide financial clarity. No agenda. Just someone who finally got clear and wanted everyone else to be able to too.

If you own rental property in the UK, you are being squeezed from two directions at once.

Property values are falling. HMRC is cracking down. And if you are a landlord who has been coasting on assumptions that were fine five years ago, the gap between where you think you are and where you actually are just got wider.

This is not about catastrophising. It is about understanding what is actually happening so you can make decisions with clarity rather than hope.

The Two Pressures Landlords Are Not Talking About

Pressure one: Your property is probably worth less than you think.

Rented property values have seen the largest decline of any property category in recent months. If you bought a few years ago, or refinanced based on previous valuations, the equity cushion you thought you had may have shrunk significantly.

Pressure two: HMRC has your data and they are using it.

The voluntary disclosure window for Section 24 errors is narrowing. HMRC's Connect system is cross-referencing mortgage interest data from lenders with what landlords claim on their tax returns. The people who came forward early faced lower penalties. That window is not closed, but it is not open for long.

Taken separately, each of these is manageable. Taken together, they create a situation where a landlord can be simultaneously asset-poor and tax-exposed.

What This Looks Like in Practice

Here is a real scenario.

Mark is 46. He bought a three-bed semi in Leeds in 2016, rented it out, and refinanced in 2021 based on what the bank valued it at then. He has a rental mortgage of £1,150 a month. The property now rents for £1,400.

On paper, this looks fine. Positive cash flow. Real estate doing what real estate does.

Except Mark has been deducting his full mortgage interest on his Self Assessment returns since 2020. He did not know about Section 24. He thought he was doing it right.

Mark's Numbers

Annual rental income£16,800

Mortgage interest£13,800

Deduction under Section 24 (20%)£2,760

Taxable profit he should have declared£14,040

Taxable profit he did declare£3,000

Shortfall per year£11,040

The Cost

Over five years (2020-2024), that is £55,200 in underdeclared income. On a higher rate band, HMRC will want around £22,000 in unpaid tax. Add penalties of up to 30% for careless behaviour, and Mark is looking at roughly £28,600 before interest.

Meanwhile, the property Mark bought for £265,000 is now worth around £215,000. His equity has dropped by £50,000.

Total damage: approximately £78,600. Not in thirty years. Now.

And this is not unusual. This is the scenario HMRC is actively working through right now, using data they have had for years.

The Question Landlords Are Not Asking

The question everyone in this situation should be asking is not "am I compliant?"

It is: if I am not, what is the combined cost of the error and the property devaluation?

For many landlords, the answer is uncomfortable. The equity they thought they had as a buffer is partially or fully consumed by tax exposure if they have been filing incorrectly. The property that was supposed to be their retirement provision is worth less and may be delivering less cash flow than the numbers suggested.

This is the double squeeze. And it is not rhetorical. It is arithmetic.

What To Do If This Is You

If you own rental property with a mortgage and have not reviewed your Section 24 position in the last three years, do not wait for a letter.

Here is what to do in the next 30 days:

Calculate your potential exposure.

Take your annual mortgage interest, multiply it by 0.8, subtract that from your rental income, and compare that to the taxable profit you have been declaring. If those numbers are substantially different, you have a problem.

Speak to a tax adviser who specialises in property.

Not a general accountant. Someone who knows landlord tax specifically. The difference between voluntary disclosure and HMRC finding it first is often five figures.

Get a current property valuation.

Not from the bank. Not a Zoopla estimate. A real valuation so you know where you actually stand on the asset side.

You cannot make good decisions about a property portfolio when you are looking at the wrong numbers on either side of the balance sheet.

Your Numbers, Not Assumptions

Delphina shows you your complete financial picture in one place: your properties, your pensions, your other investments. Not as a projection. As a present-tense picture of where you actually are.

If you want to understand exactly where you stand before you speak to a tax adviser, see your numbers first.

Know where you are. Change where you are going.

See your complete financial picture before you make any decisions about your rental property.

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