Mortgage Arrangement Fees: Tax Relief for Landlords (and the Section 24 Trap)
Last updated 24 June 2026 · 8 min read · By the LandlordTaxAi Editorial Team
The short answer
Mortgage arrangement, broker and product fees are finance costs for residential landlords — so they’re not deducted from your rental profit. Like mortgage interest, they only attract a 20% basic-rate tax reducer under Section 24. Many landlords wrongly claim them in full and over-relieve their tax.
Here’s a costly misconception: landlords often treat mortgage arrangement fees like any other expense and deduct them straight from rental income. They can’t. HMRC classes these fees as finance costs, which means they’re swept up by the Section 24 restriction — the same rule that limits mortgage interest relief.
Get this wrong and you either over-claim (risking an enquiry) or miss the relief entirely. This guide explains how arrangement fees are actually relieved for 2026/27. For the mechanics, read how Section 24 works.
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Section 24 Calculator (incl. Arrangement Fees)
Add your mortgage interest and arrangement/broker fees to see your real basic-rate tax reducer for 2026/27.
Result
- Tax the old way (interest deducted)
- £2,400
- Tax under Section 24 (20% credit)
- £3,600
- Extra tax Section 24 costs you
- £1,200
Arrangement and broker fees are finance costs, relieved at 20%. Estimate only.
Why arrangement fees are ’finance costs’
HMRC defines finance costs as mortgage interest, interest on loans to buy furnishings, and the fees incurred when taking out or repaying mortgages or loans. That last part is the key — it catches arrangement fees, product fees, broker fees and valuation fees tied to the borrowing.
Because they’re finance costs, they follow the Section 24 rules introduced for residential landlords from 2017/18 and fully in force since 2020/21: no deduction from profit, just a basic-rate tax credit.
- Mortgage arrangement / product fees
- Mortgage broker fees
- Valuation and lender admin fees for the loan
- Early repayment charges and fees to repay a mortgage
Do not deduct these from your rental income like a repair or insurance premium. They belong in the finance-costs box, where only 20% relief applies for residential lets.
How the relief actually works
You add your arrangement and broker fees to your mortgage interest to get your total finance costs for the year. You then receive a basic-rate (20%) tax reducer — 20% of the lower of your finance costs, your property profit, or your income above the Personal Allowance.
For a basic-rate landlord this is roughly the same as a full deduction would have been. For a higher-rate landlord it’s worth far less than the old treatment — another reason the Section 24 era hits geared landlords hardest.
Use the Section 24 calculator to see the exact reducer once you include arrangement fees with your interest.
The limited-company difference
If you hold property through a limited company, Section 24 doesn’t apply — the company deducts mortgage interest and arrangement fees in full as business expenses. This is one of the reasons some landlords incorporate.
Incorporation brings its own costs (CGT and SDLT on transfer, company admin), so it’s rarely worth it for fees alone. Take advice before restructuring.
Put finance costs in the right box, every time
LandlordTaxAi automatically classes arrangement and broker fees as finance costs and applies the Section 24 reducer — so you claim the right relief, not an HMRC red flag.
See how it worksA worked example
Tom, a higher-rate landlord, pays £6,000 mortgage interest plus a £1,500 arrangement fee and £500 broker fee in 2026/27.
| Mortgage interest | £6,000 |
| Arrangement fee | £1,500 |
| Broker fee | £500 |
| Total finance costs | £8,000 |
| Section 24 reducer (20% × £8,000) | £1,600 |
| If wrongly deducted at 40% instead | £3,200 (over-relief — incorrect) |
Tom’s correct relief is a £1,600 tax reducer. Treating the fees as a normal expense would double the relief he claims — exactly the error HMRC looks for.
Frequently asked questions
Can landlords deduct mortgage arrangement fees?
Not from rental profit. For residential lets they’re finance costs, so they only get the 20% basic-rate tax reducer under Section 24.
Are broker fees treated the same as arrangement fees?
Yes. Broker fees, product fees and valuation fees tied to the loan are all finance costs, relieved at the basic rate.
Why can’t I just claim the fee as an expense?
HMRC classes fees for taking out or repaying a mortgage as finance costs. Deducting them in full would over-relieve your tax and is a common enquiry trigger.
Does this apply to limited companies?
No. Companies deduct mortgage interest and arrangement fees in full — Section 24 only restricts individual residential landlords.
How much relief do I actually get?
A tax reducer worth 20% of the lower of your finance costs, property profit, or income above the Personal Allowance.
Are early repayment charges finance costs too?
Yes — fees to repay or exit a mortgage are finance costs, so they fall under the same Section 24 restriction.
Written and reviewed by the LandlordTaxAi Editorial Team. Our guides are reviewed against current HMRC guidance and updated when the rules change. Operated by LandlordTaxAi, United Kingdom. Follow us on LinkedIn.
Last reviewed: 24 June 2026 · Researched against primary UK sources for the 2026/27 tax year: https://www.gov.uk/guidance/income-tax-when-you-rent-out-a-property-working-out-your-rental-income; https://www.gov.uk/government/publications/restricting-finance-cost-relief-for-individual-landlords/restricting-finance-cost-relief-for-individual-landlords; https://www.gov.uk/hmrc-internal-manuals/property-income-manual/pim2054. This article is informational only and does not constitute tax advice. Check the latest details on GOV.UK or with a qualified accountant.