12/05/2026
🏘️ BTL Landlords / Portfolio Landlords – Let’s Talk Section 24 🏘️
Love it or hate it, it’s here and it’s having a big impact on leveraged landlords
For those who don’t know, Section 24 means that individual landlords can no longer deduct mortgage interest when calculating taxable rental profits
Instead, they receive a basic rate (20%) tax credit on the interest
Let’s run a simple example
⭐ PRIVATE LANDLORD EXAMPLE ⭐
Rent: £1,200 per month (£14,400 per year)
Mortgage Interest: £900 per month (£10,800 per year)
Insurance & Repairs: £200 per month (£2,400 per year)
If we look at the real cash position first:
£14,400 rent
– £10,800 mortgage interest
– £2,400 expenses
= £1,200 real cash profit
So far so good… however this is where Section 24 changes things
For tax purposes the mortgage interest cannot be deducted, so the calculation becomes:
£14,400 rent
– £2,400 expenses
= £12,000 taxable profit
If the landlord is a 40% higher rate taxpayer:
£12,000 × 40% = £4,800 tax
Then the Section 24 tax credit applies:
20% × £10,800 mortgage interest = £2,160 credit
Final tax bill:
£4,800 – £2,160 = £2,640 tax
So the real position becomes:
£1,200 actual profit
– £2,640 tax bill
= –£1,440 net position
In this example the landlord is effectively putting money in each year (ignoring capital growth)
Now let’s look at the same numbers through a Limited Company / SPV structure
⭐ COMPANY / SPV EXAMPLE ⭐
Companies can still deduct mortgage interest as a business expense
£14,400 rent
– £10,800 mortgage interest
– £2,400 expenses
= £1,200 company profit
Corporation tax would then apply
Small profits corporation tax is currently 19%, so:
£1,200 × 19% = £228 tax
Leaving approximately:
£972 retained profit in the company
Important caveats worth mentioning:
✅ If profits are withdrawn personally as dividends, further dividend tax may apply depending on the individual’s tax band
✅ Company mortgages are often slightly more expensive than personal BTL mortgages
✅ Moving an existing property into a company can trigger Capital Gains Tax and Stamp Duty, so professional tax advice is essential before considering this
✅ Limited companies also come with accountancy, compliance and admin costs.
So whilst company ownership can be more tax efficient in some cases, it is not a one-size-fits-all solution and should always be looked at alongside tax advice
The key point here is simply to illustrate how Section 24 can affect highly leveraged landlords, particularly those paying higher rate tax
If you’re a BTL landlord reviewing your mortgage or considering your next purchase, feel free to reach out.
📱 07894564159
💻 [email protected]
All information above is for educational purposes only and does not constitute advice. Always seek professional tax advice before making decisions. Your property may be repossessed if you do not keep up repayments on your mortgage.
