Landlord mortgage interest tax calculator
Landlords can no longer deduct mortgage interest from rent. They get a 20% tax credit instead, which costs higher rate taxpayers far more. See what it means for your property.
How this is calculated
Rental profit is worked out without deducting mortgage interest, and taxed on top of your other income at your normal rates.
You then get a tax credit of 20% of the lowest of three figures: the mortgage interest, the property profit, and your total income above the personal allowance. Any interest that cannot be used carries forward.
For comparison it also shows the tax as it would be if the interest were fully deductible, which is how individual landlords were taxed before the change and how companies are still taxed.
This uses the 2026/27 rates for England, Wales and Northern Ireland and assumes you own the property in your own name.
Rates used · 2026/27
| Mortgage interest credit | 20% in 2026/27 |
| Property income rates from 6 April 2027 | 22%, 42% and 47%, announced |
| Credit from 6 April 2027 | 22%, announced |
| Applies to | residential property held personally |
Last checked July 2026. Source: HMRC and gov.uk.
Worked example
£15,000 of rent less £2,500 of costs is £12,500 of profit. On top of a £55,000 salary it is all taxed at 40%, so £5,000, less a £1,200 credit on £6,000 of mortgage interest, leaving £3,800 of tax. With the interest fully deductible it would be £2,600. After interest, costs and tax the property leaves £2,700 a year.
Common questions
What is Section 24?
The rule that replaced the deduction for mortgage interest with a basic rate tax credit for individual landlords of residential property. It was phased in from 2017 and fully applied from April 2020.
Does it affect basic rate taxpayers?
Much less. A basic rate taxpayer gets roughly the same relief either way, unless the rental profit pushes them into the higher rate band, which it often does because the interest is no longer deducted first.
Does it apply to limited companies?
No. A company still deducts mortgage interest as a cost. That is why many landlords have looked at holding property through a company, though moving existing property in usually triggers stamp duty and capital gains tax.
What changes in 2027?
Property income is due to be taxed at its own rates of 22%, 42% and 47% from 6 April 2027, with the interest credit rising to 22%.