Information GuideSection 24 for Landlords
Section 24 has materially increased the tax burden for individual landlords since its full implementation in 2020. Understanding what it covers - and keeping the right records - is the first step to managing its impact. Information only; not tax/legal advice. England & Wales. Current as at September 2026.
What Section 24 Does
No More Deductions
Since April 2020, individuals cannot deduct finance costs from rental income.
20% Tax Reduction
Instead, a 20% basic-rate tax reduction may apply to a limited amount.
Who's Affected
Applies to individuals and partnerships; companies are not affected.
FHL Exception
The FHL regime was abolished from April 2025. FHLs are now taxed as ordinary property businesses. See full update ↓
Who It Applies To (and Not)
Applies To
- Individuals with UK/foreign property businesses
- Partners in partnerships
- Individual landlords with multiple properties
- Buy-to-let mortgage holders
Does Not Apply To
- Companies and corporate structures (SPVs, REITs, social housing companies)
- Corporate property investors
Recordkeeping That Helps
Section 24 Log
- Detailed loan register with purposes
- Use of funds documentation
- Monthly interest and fees tracking
- Apportionment calculations
Evidence Index
- Loan agreements and amendments
- Property completion statements
- Bank transfer evidence
- Professional advice records
Professional Guidance
Note assumptions and judgements in your records. Your adviser confirms tax treatment and ensures compliance with current regulations.
Document Decisions
Record every judgement call - how you split costs, what you included, and why.
Record Assumptions
Note the basis for apportionments and estimates with dates and sources.
Professional Review
Share your log with your adviser at year-end so they can confirm the tax treatment.
Need help keeping these records? See our done-for-you landlord bookkeeping service or 1-to-1 training. If you are in scope for Making Tax Digital, your Section 24 log is part of your digital records requirement. Selling a property with Section 24 finance costs? See our CGT guide for landlords.
What Counts as "Finance Costs"
Interest Payments
Mortgage, loan, or overdraft interest used specifically for the property business.
Associated Fees
Arrangement, broker, guarantee, and similar charges related to property financing.
Refinancing
Apportion interest where funds are partly for private use - careful calculation required.
How the 20% Tax Reduction Works (High Level)
Identify the Lower Amount
Take the lowest of: finance costs, property profits, or adjusted total income (ATI) slice - ATI is your total income after personal allowances and certain reliefs.
Apply 20% Rate
Calculate 20% of the identified lower amount.
Carry Forward Unused
Any unused finance costs carry forward as "basic rate reduction" amounts.
Example (Static - Illustrative Only)
Step 1: Identify Amounts
Step 2: Apply Reduction
Jargon Buster - Quick Terms (Plain English)
Furnished Holiday Let
Short-term, furnished holiday accommodation. Note: FHL regime abolished April 2025 - see update above.
Special Purpose Vehicle
A limited company set up to hold property; separate from you personally.
Finance Costs
Interest and certain loan fees directly linked to the property business.
Apportionment
Splitting a cost fairly between business and private use.
Adjusted Total Income
HMRC measure used when limiting the Section 24 reduction.
Basic Rate Reduction
The 20% tax credit available under Section 24 rules.
FAQs
Do companies still deduct mortgage interest?
Yes. Companies compute profits under corporation tax; Section 24 does not apply to companies. This is why many landlords consider incorporating their property businesses.
Is Section 24 different for FHLs?
The FHL regime was abolished from April 2025 - Section 24 now applies to FHL finance costs. See the full update above and seek professional advice.
What records should I keep for Section 24?
A monthly loan register (purpose, balance, interest, fees), an apportionment calculation where funds have mixed use, a complete evidence index (loan agreements, bank transfers, completion statements, adviser correspondence), and a carry-forward schedule updated each tax year. Your accountant needs all of these at year-end.
Can the credit create a repayment by itself?
It can reduce income tax due to nil; unused amounts may carry forward. However, it typically cannot create a repayment on its own - professional advice is essential for your specific circumstances.
How to Get Started (Simple Steps)
List Property Loans
Create a comprehensive register of all property loans and document exactly what each loan funded.
Build Interest Log
Establish monthly interest tracking and create an organised evidence index for all supporting documents.
Professional Review
Discuss apportionments and carry-forwards with your qualified tax adviser to ensure compliance.
Get Support
Use our enquiry form to discuss your specific recordkeeping needs and get professional guidance.
Full Enquiry Form
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