UK Landlord Tax Calculator
Estimate your property tax liability and see the Section 24 impact on your rental income.
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Includes: agent fees, insurance, repairs, maintenance, legal fees
The tax rate that applies to your rental profit above your personal allowance
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Breakdown
Frequently Asked Questions
What is Section 24 mortgage interest relief?
Section 24 of the Finance Act 2016 (effective from April 2017) changed how landlords can claim mortgage interest tax relief. Previously, you could deduct mortgage interest from your rental income before calculating tax. Now, you only receive a basic rate (20%) tax credit on your mortgage interest, regardless of your income tax band. For higher rate taxpayers, this means the real cost of your mortgage interest has increased significantly.
How does Section 24 affect my tax bill?
Before Section 24, a higher rate taxpayer earning £20,000 rental profit with £12,000 mortgage interest would pay tax on £8,000 at 40%, costing £3,200. After Section 24, you pay tax on the full £20,000 profit at 40% (£8,000), but receive a 20% credit on your £12,000 mortgage interest (£2,400). Your total tax is now £5,600 instead of £3,200. Section 24 has significantly increased the tax burden for residential landlords with mortgages.
Can I still deduct other expenses from rental income?
Yes, you can still deduct allowable expenses from your rental income: letting agent fees (typically 8-12%), maintenance and repairs, insurance, professional fees (accountancy), and some utility bills if you pay them as part of the tenancy. The key restriction is that mortgage interest itself is no longer fully deductible. Improvements (as opposed to repairs) are also not deductible.
Should I switch to a limited company to avoid Section 24?
Many landlords are considering this, but it depends on your situation. Limited companies can still claim full mortgage interest relief, but there are other considerations: higher setup costs, corporation tax (currently 25%), stamp duty on property purchases, and less flexibility extracting money. If you're a higher rate taxpayer with a large mortgage, switching to a limited company structure may reduce your tax bill, but get professional advice before making this decision.
What is the additional 3% stamp duty for landlords?
If you're buying an additional residential property (not your primary residence), you pay an extra 3% stamp duty surcharge on top of the standard rates. This applies to buy-to-let properties and second homes. First-time buyers purchasing their first property are exempt. If you're selling your main home and buying a new one within 3 years, you may be able to claim back the surcharge.
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