Property investment remains one of the UK’s most popular routes to building long-term wealth—but recent tax changes have significantly impacted profitability. One of the most important changes affecting landlords is Section 24 of the Finance (No. 2) Act 2015, commonly referred to as the “mortgage interest relief restriction.”
This restriction now affects Furnished Holiday Lets as well as Buy to Lets and HMO’s.
The changes to Holiday Lets and Serviced Accommodation are covered in this blog.
Holiday Lets – Good news for Capital Allowances – Steve J Bicknell Tel 01202 025252
More details on Section 24 are in this blog
If you’re a portfolio landlord or considering property investment, understanding Section 24 is essential for financial planning and compliance.
❓ What is Section 24?
Introduced in 2017 and phased in over four years, Section 24 removes the ability for individual landlords to deduct all of their mortgage interest from rental income before calculating their income tax.
Instead of full relief, landlords now receive a basic rate tax credit (20%) on their finance costs.
💡 Why It Matters
If you own property in your personal name, this change can push you into a higher tax bracket—even if your real profits haven’t changed.
Example:
- Rental income: £40,000
- Mortgage interest: £25,000
- Before Section 24: You paid tax on £15,000
- Now: You pay tax on the full £40,000, then receive a 20% credit on the £25,000 mortgage interest
This could increase your tax bill substantially, especially for:
- Higher rate taxpayers
- Portfolio landlords with significant debt
- Those receiving child benefit or working tax credits, where higher income triggers a clawback
🏛️ Company Ownership as an Alternative
Many investors are now considering buying property through a limited company, which is not affected by Section 24.
Key benefits:
- Mortgage interest remains fully deductible
- Corporation tax applies (currently 19–25%)
- Potential long-term inheritance tax planning advantages
But it’s not right for everyone—incorporation involves costs, complexity, and potential capital gains tax (CGT) or stamp duty implications.
🔎 What Should You Do?
A professional review is essential. At Bicknell Business Advisers, we help landlords and property investors across the UK understand:
- How Section 24 affects your tax position
- Whether incorporation is right for you
- How to structure your investments tax-efficiently
- Planning strategies to reduce your tax exposure
📞 Book a Free Consultation Today
If you’re unsure how Section 24 is impacting you, or want to explore your options, get in touch today.
📞 Call: 01202 025252
🌐 Visit: www.bicknells.net
At Bicknell Business Advisers, we specialise in helping landlords and property businesses navigate complex tax legislation with clarity and confidence.
