Mortgage Interest Tax Relief for Landlords: How Much You Actually Get (2026/27)
Last updated 24 June 2026 · 8 min read · By the LandlordTaxAi Editorial Team
The short answer
Landlords can’t deduct mortgage interest from rental profit anymore. Instead you get a basic-rate tax credit worth 20% of your interest. For a basic-rate landlord that’s roughly the same as before; for a higher-rate landlord it’s a real loss, because the profit is taxed at 40% but relieved at only 20%.
"How much mortgage interest can I claim?" has a frustrating answer since the Section 24 reforms: none of it as a deduction — but you do get a tax credit. The distinction sounds technical, yet it makes a huge difference to what you actually pay, especially if you’re a higher-rate taxpayer.
The calculator above shows your real mortgage interest relief for 2026/27. This guide explains how the 20% credit works and why it hits some landlords far harder than others. For the full mechanics, see how Section 24 works.
Free calculator · no sign-up
Mortgage Interest Tax Relief Calculator
See your real 20% basic-rate relief on mortgage interest and the tax due 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
Relief is a 20% tax reducer, not a deduction. Higher-rate landlords get half the old benefit. Estimate only.
From deduction to 20% tax credit
Before the reform, mortgage interest was deducted from your rent like any expense, so you got relief at your highest tax rate. Now it’s a tax reducer worth a flat 20% of your finance costs, applied after your tax is calculated on the full profit.
You add up your mortgage interest (plus arrangement and broker fees, which also count as finance costs), and your tax bill is cut by 20% of that figure.
The reducer is 20% of the lowest of your finance costs, your property profit, or your income above the Personal Allowance — and any unused amount carries forward. The calculator above handles this.
Why your tax rate changes everything
The 20% credit is the same for everyone — but its value depends on the rate you’d otherwise have got relief at.
| Your tax rate | Relief you get | Effect |
|---|---|---|
| Basic rate (20%) | 20% credit | Roughly neutral — same as before |
| Higher rate (40%) | 20% credit | Half the old relief — a real cost |
| Additional rate (45%) | 20% credit | Less than half — the biggest hit |
Because the full rent now counts as income, the change can also push you into a higher band, erode your Personal Allowance over £100,000, or trigger the High Income Child Benefit Charge — costing more than the headline relief gap.
How to use the relief calculator above
The calculator turns your interest and income into the real relief figure and the tax you’ll pay.
See your real mortgage relief in seconds
LandlordTaxAi applies the 20% reducer to your interest and arrangement fees automatically, tracks any carry-forward, and shows your true tax every quarter.
See how it worksA worked example
Two landlords each have £15,000 rental profit and £6,000 mortgage interest (2026/27) — one basic-rate, one higher-rate.
| Basic-rate: tax on £15,000 at 20% | £3,000 |
| Basic-rate: 20% credit on £6,000 | −£1,200 → £1,800 tax |
| Higher-rate: tax on £15,000 at 40% | £6,000 |
| Higher-rate: 20% credit on £6,000 | −£1,200 → £4,800 tax |
| Old system (higher-rate, interest deducted) | would have been £3,600 |
The same property and interest, but the higher-rate landlord pays £4,800 versus £1,800 — and £1,200 more than under the old rules. That gap is the Section 24 cost.
Frequently asked questions
Can landlords claim mortgage interest tax relief?
Not as a deduction. You get a basic-rate tax credit worth 20% of your mortgage interest instead — Section 24 removed the full deduction for residential landlords.
How much relief do I actually get?
A tax reducer of 20% of the lower of your finance costs, property profit, or income above the Personal Allowance. Any excess carries forward.
Why do higher-rate landlords lose out?
Their profit is taxed at 40% but interest is only relieved at 20% — half the old benefit. Basic-rate landlords are roughly unaffected.
Do arrangement fees count?
Yes. Mortgage arrangement and broker fees are finance costs too, so they’re relieved at 20% alongside the interest — see mortgage arrangement fees.
Does this apply to limited companies?
No. Companies still deduct mortgage interest in full — Section 24 only restricts individual landlords.
What if my relief is capped?
If profit or income limits the 20% reducer, the unused finance cost is carried forward to future years — it’s deferred, not lost.
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/changes-to-tax-relief-for-residential-landlords-how-its-worked-out-including-case-studies; https://www.gov.uk/government/publications/restricting-finance-cost-relief-for-individual-landlords/restricting-finance-cost-relief-for-individual-landlords. This article is informational only and does not constitute tax advice. Check the latest details on GOV.UK or with a qualified accountant.