Section 24 Calculator 2026/27: Work Out Your Mortgage Interest Tax Relief
Last updated 24 June 2026 · 9 min read · By the LandlordTaxAi Editorial Team
The short answer
Under Section 24, landlords can no longer deduct mortgage interest from rental profit. Instead you get a basic-rate (20%) tax reducer equal to 20% of the lowest of your finance costs, your property profit, or your income above the Personal Allowance. The free calculator above shows your reducer and real tax cost for 2026/27.
Section 24 is the rule that quietly raised tax bills for hundreds of thousands of UK landlords. Since 2020/21 — and fully in force for 2026/27 — you cannot deduct mortgage interest as an expense. You get a 20% tax credit instead, and for higher-rate landlords that’s a genuine tax rise.
The maths has a twist most calculators miss: the reducer is 20% of the lowest of three figures, and any unused amount carries forward. The calculator above handles this for you. This guide explains exactly how it works so you can trust the number and plan around it.
For the background, read how the Section 24 restriction works and the Section 24 cost worked examples.
Free calculator · no sign-up
Section 24 Calculator 2026/27
Work out your basic-rate tax reducer on mortgage interest and the real cost of the finance-cost restriction.
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
Applies the 20% reducer to the lowest of finance costs, profit, or income over the Personal Allowance. Estimate only.
What Section 24 changed
Before 2017, mortgage interest was an ordinary rental expense: you deducted it from rent to get your profit, and paid tax on what was left. Section 24 phased that out between 2017/18 and 2020/21. From 2020/21 onward — including 2026/27 — none of your finance costs reduce your taxable profit.
Instead, HMRC gives you a basic-rate tax reduction. You calculate tax on the full profit (including the part that funded the interest), then knock off a credit worth 20% of your finance costs.
"Finance costs" means mortgage and loan interest, plus interest on loans to buy furnishings and fees to arrange those loans. Capital repayments have never been deductible.
How the 20% reducer is actually calculated
Here’s the detail that catches people out. The reducer isn’t simply 20% of your mortgage interest. It’s 20% of the lowest of these three numbers:
- Finance costs for the year (plus any unused finance costs brought forward)
- Property business profits for the year
- Adjusted total income — your income above the Personal Allowance (excluding savings and dividends)
| Figure | Why it can be the lowest |
|---|---|
| Finance costs | Usually the lowest when you’re profitable and a higher earner |
| Property profits | Lowest when interest is high relative to profit (heavily geared) |
| Income over Personal Allowance | Lowest when your total income is modest |
If the reducer is capped by profits or income rather than finance costs, the difference is carried forward to future years — so it isn’t lost, just delayed. The calculator above tracks this.
Why higher-rate landlords pay more
For a basic-rate (20%) taxpayer, Section 24 is roughly neutral — you’d have saved tax at 20% on the interest anyway, and the reducer gives you 20% back.
For a higher-rate (40%) or additional-rate (45%) taxpayer it’s a real cost: your profit is taxed at 40% or 45%, but you only get relief at 20%. Worse, because the full rent now counts as income, Section 24 can tip you into a higher band, erode your Personal Allowance above £100,000, or trigger the High Income Child Benefit Charge.
Section 24 can even create a tax bill on a property making a cash loss, because tax is charged on profit before interest. Highly geared higher-rate landlords are hit hardest — model your exact position with the calculator above.
How to use the Section 24 calculator above
See your true Section 24 cost in seconds
LandlordTaxAi applies the Section 24 reducer automatically, tracks any carry-forward, and shows your live tax position every quarter — no manual maths.
See how it worksA worked example
Aisha is a higher-rate taxpayer with £20,000 rental profit before interest and £9,000 of mortgage interest (2026/27).
| Taxable rental profit (interest NOT deducted) | £20,000 |
| Tax at 40% | £8,000 |
| Section 24 reducer (lower of figures = £9,000 finance costs) | 20% × £9,000 = £1,800 |
| Tax after reducer | £8,000 − £1,800 = £6,200 |
| Old pre-2017 system (interest deducted, 40% on £11,000) | £4,400 |
Section 24 costs Aisha £1,800 more than the old rules (£6,200 vs £4,400) on the same property — the higher-rate squeeze in one example.
Frequently asked questions
Can landlords still claim mortgage interest in 2026/27?
Not as a deduction. You get a 20% basic-rate tax reducer on finance costs instead. None of the interest reduces your taxable rental profit.
Is the reducer always 20% of my mortgage interest?
No — it’s 20% of the lowest of your finance costs, property profits, or income above the Personal Allowance. Any excess is carried forward.
Does Section 24 affect basic-rate taxpayers?
Largely no — at 20% the reducer matches what the deduction would have saved. The pain is for higher and additional-rate landlords, who are taxed at 40%/45% but relieved at 20%.
What counts as a finance cost?
Mortgage and loan interest, interest on loans to buy furnishings, and fees to arrange those loans. Capital repayments are not included and never were deductible.
Does Section 24 apply to limited companies?
No. Companies still deduct mortgage interest as a normal business expense — which is a key reason some landlords incorporate. Take advice before doing so.
What happens to the carried-forward amount?
If your reducer is limited by profits or income, the unused finance cost is carried forward and added to the next year’s calculation — 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; 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.