If you’re a landlord in 2026, one of the most common questions is: can I still claim mortgage interest?

The short answer is yes — but not in the way you used to. The rules have changed significantly, and understanding them is key to avoiding unexpected tax bills.

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What Changed? Section 24 Explained

Before 2017, landlords could deduct 100% of mortgage interest from rental income before calculating tax.

That’s no longer the case.

Under Section 24 rules, which are now fully in force:

• You cannot deduct mortgage interest from rental income
• You are taxed on your full rental income (minus other expenses)
• You then receive a basic rate (currently 20%) tax credit on the interest

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How It Works in 2026

Here’s how the system works today:

1. Calculate rental income
2. Deduct allowable expenses (NOT mortgage interest)
3. Calculate tax on the remaining profit
4. Apply a 20% tax credit on mortgage interest

Example:

• Rental income minus expenses: £12,000
• Mortgage interest: £6,000

You are taxed on £12,000, not £6,000.
Then you get a £1,200 tax credit (20% of £6,000).

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Who Is Most Affected?

These rules mainly affect:

Individual landlords (buy-to-let in personal name)

• Higher-rate taxpayers are hit hardest
• You may pay tax even if profits are low

Not affected :

• Limited companies
• Commercial property landlords

Companies can still fully deduct mortgage interest as an expense before tax

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2026–2027: What’s Changing Next?

More changes are coming, so planning ahead is crucial:

• Ongoing tightening of landlord tax rules
• Increased focus on digital reporting (MTD)
• Greater scrutiny on property income

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Key Takeaways

• ✔ You can still claim mortgage interest
• ❗ But only as a 20% tax credit (not a deduction)
• ❗ You are taxed on gross rental income, not profit after interest
• ❗ Higher-rate taxpayers lose the most
• ✔ Limited companies still get full relief

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What Should Landlords Do?

Given these rules, many landlords are now:

• Reviewing whether to incorporate into a limited company
• Reducing borrowing where possible
• Improving tax efficiency through planning

The right strategy depends on your income, portfolio size, and long-term plans

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Final Thoughts

Mortgage interest relief hasn’t disappeared — it’s just been significantly restricted.

For many landlords in 2026, the key issue isn’t whether you can claim it…
…it’s whether your current structure is still tax efficient.

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Need Help Reviewing Your Property Tax Position?

At Taxes Done Right, we help landlords structure their property portfolios efficiently and stay compliant with the latest HMRC rules.

📞 Call: 0161 710 1901
📧 Email: Tax@TaxesDoneRight.co.uk
Dm Us:
www.taxesdoneright.co.uk