Buy-to-Let Mortgage Interest Relief: What UK Landlords Get in 2026
Individual landlords haven't been able to deduct mortgage interest from rental income before tax since 2020 — and a further change is confirmed for 2027.
This Banke guide covers how relief actually works now.
How Relief Works Today
Since April 2020, individual landlords can't deduct mortgage interest or other finance costs from rental income before calculating tax. Instead, you get a basic-rate tax reduction — a credit worth 20% of your finance costs, applied after your tax liability is calculated.
Why This Hits Higher-Rate Taxpayers Hardest
This restriction, known as Section 24, particularly affects higher-rate taxpayers, who could previously deduct the full cost of mortgage interest before calculating tax. Now everyone gets the same flat 20% credit regardless of their actual tax band — a real cost increase for higher-rate landlords compared to the old system.
Who's Exempt
Section 24 only applies to individual landlords and partnerships of individuals holding residential property. It does not apply to limited companies, commercial property investments, or property development businesses — part of why some landlords have moved portfolios into a limited company structure.
What Changes in April 2027
From 6 April 2027, mortgage interest relief moves to a new property basic rate of 22%, up from 20%. Alongside this, tax rates on property income are increasing to 22% (basic), 42% (higher) and 47% (additional) — a genuine cost increase worth factoring into your 2027 planning now.
Talk to Banke
Contact Banke and pair this with a UK tax advisor to plan for the 2027 changes.