BUY-TO-LET TAX · 2026/27
Section 24 Tax Calculator for Landlords
Section 24 changed how landlords are taxed on mortgage interest. Before, interest reduced rental profit; now tax is charged before interest and a basic-rate credit is applied afterwards.
For higher-rate taxpayers this can create a tax bill larger than the property’s real cash profit. Use the calculator to compare both positions and inspect the assumptions.
Estimated Section 24 tax
- Real cash profit
- £1,200
- Old-model tax
- £480
- Finance-cost credit
- £1,980
- After-tax position
- -£1,260
Illustrative 2026/27 higher-rate estimate. Actual tax depends on bands, allowances and your full return.
A worked example: £250,000 property, higher-rate taxpayer
Assume £180,000 interest-only borrowing at 5.5%, £1,200 monthly rent, £3,300 annual running costs and £60,000 salary. Annual rent is £14,400, interest is £9,900 and real cash profit is £1,200.
Before Section 24
Taxable rental profit was £14,400 − £3,300 − £9,900 = £1,200. At 40%, tax was £480 and after-tax profit £720.
Under Section 24
Taxable property profit is £11,100 before finance costs. A 20% credit on £9,900 interest is £1,980, subject to the statutory cap. The same cash profit can therefore become a loss after tax.
| Measure | Before | After |
|---|---|---|
| Real cash profit | £1,200 | £1,200 |
| Tax due | £480 | £2,460 |
| Net position | +£720 | −£1,260 |
Common mistakes
- Assuming a cash loss means no tax is due.
- Forgetting gross-rent band shifts and the £100,000 allowance taper.
- Ignoring High Income Child Benefit Charge effects.
- Treating incorporation as an automatic fix.
Frequently asked questions
What is Section 24 in simple terms?
Mortgage interest is no longer deducted from residential rental income; a 20% finance-cost credit is applied instead.
Does Section 24 affect basic-rate taxpayers?
Usually less, although gross rent can push a landlord into a higher band.
Does it apply to limited companies?
No, but companies have Corporation Tax, dividend, financing and administration costs.
What if my property makes a loss?
The credit is capped and unused relief may carry forward.
Can I still deduct other costs?
Allowable agent fees, insurance, repairs and professional costs remain deductible.
Does this apply across the whole UK?
The mechanism is UK-wide; Scottish bands affect the amount.
QUICK ANSWER
What is this calculator?
Section 24 Tax Calculator turns the inputs on this page into a transparent planning estimate for the selected jurisdiction.
How is it calculated?
It uses the displayed inputs, the GB-2026.27.1 ruleset and the assumptions shown beside the result. Different eligibility, timing or household details can change the outcome.
Example
Use the result as an illustrative scenario, then change one input at a time to compare the next decision. It is not an offer or personalised financial advice.
Official source
The source panel below links to the official guidance used for this tool.
SOURCES & REVIEW
Checked against official guidance
Last reviewed 4 August 2026 · Rule version GB-2026.27.1
Daily/weekly source monitoring. If a source changes, the affected rule set is reviewed before publication.
SOURCE LINKS
Every calculation keeps the official references visible so the numbers can be checked quickly.
WHY RESULTS DIFFER
Why two users can see different results
Why the result can differ
Different tax codes, payroll periods, Scottish bands, pension methods or lender assumptions can change the outcome.
One-off bonuses, pay frequency, overpayments, allowances and reliefs can move the result away from a simple annual estimate.
Where a rule depends on eligibility or legal status, this page shows an estimate and links to official guidance.
The explanation stays close to the result so users can compare the assumptions immediately instead of hunting through a separate policy page.
COMMON QUESTIONS
Frequently asked questions
What is Section 24 in simple terms?
Mortgage interest is no longer deducted from residential rental income; a 20% finance-cost credit is applied instead.
Does Section 24 affect basic-rate taxpayers?
Usually less, although gross rent can push a landlord into a higher band.
Does it apply to limited companies?
No, but companies have Corporation Tax, dividend, financing and administration costs.
What if my property makes a loss?
The credit is capped and unused relief may carry forward.
Can I still deduct other costs?
Allowable agent fees, insurance, repairs and professional costs remain deductible.
Does this apply across the whole UK?
The mechanism is UK-wide; Scottish bands affect the amount.