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By If you’re a landlord in the UK, Section 24 of the Finance Act 2015 is likely one of the biggest factors affecting your rental profits — and it remains just as relevant in 2025.
At TT Accountancy Services (TTAS), many landlords come to us asking how Section 24 impacts their tax bill today, what they can legally deduct, and how to plan ahead.
This guide explains everything you need to know about Section 24 in 2025, how to reduce its impact, and the smart tax strategies landlords across London are now using.
What Is Section 24?
Section 24 (also known as the “Tenant Tax”) is a tax rule that restricts the amount of mortgage interest landlords can deduct from their rental income.
Before Section 24:
✔ Landlords could deduct 100% of mortgage interest as an expense.
After Section 24 (fully implemented in 2020 and still active in 2025):
Mortgage interest is no longer an allowable expense.
✔ Instead, landlords receive a 20% tax credit on mortgage interest.
This means many landlords — especially higher-rate taxpayers — pay significantly more tax than they used to.
Who Is Affected by Section 24 in 2025?
Section 24 applies to:
- Individual landlords
- Partnerships
- Landlords filing under personal income (Self-Assessment)
It does NOT apply to:
- Limited companies
- Furnished Holiday Lets (FHLs)
- Commercial property landlords
- Property investors using SPVs
If you’re renting out residential property in your personal name, Section 24 affects you.
How Section 24 Impacts Landlords Financially
1. Higher Income Tax Bills
Because rental profits are calculated before deducting mortgage interest, many landlords appear to earn more on paper — pushing them into:
- Higher tax brackets
- Higher rate (40%) tax
- Additional rate (45%) tax
2. Reduced Cash Flow
Your rental income hasn’t changed, but your tax bill has increased, reducing monthly profit.
3. Possible Loss of Personal Allowance
If Section 24 inflates your taxable income above £100,000, you could begin losing your personal allowance.
4. Lower Return on Investment
For highly leveraged properties, some landlords see their returns shrink or disappear altogether.
Example (2025): How Section 24 Changes Tax Calculations
Before Section 24:
Rental income – mortgage interest = taxable profit.
After Section 24:
Rental income is taxed in full, and you receive a 20% credit on mortgage interest.
If you’re a 40% taxpayer, you’re effectively losing half of the relief you used to get.
Strategies to Reduce Section 24 Impact in 2025
At TTAS, we help London landlords legally minimise Section 24 exposure using smart tax planning, including:
1. Incorporating into a Limited Company
Companies can still deduct 100% of mortgage interest.
Benefits:
- Lower Corporation Tax rates
- Full interest deductibility
- Tax-efficient profit extraction
Not always suitable — but worth assessing.
TTAS can run a full “Incorporation vs Personal Ownership” tax comparison.
2. Using a Special Purpose Vehicle (SPV)
Many buy-to-let investors now operate through SPVs for:
- Tax efficiency
- Easier lending terms
- Lower long-term tax exposure
3. Switching to a Furnished Holiday Let (FHL)
FHLs are treated differently and not affected by Section 24.
They come with better tax advantages, including:
- Capital allowances
- Higher deductible expenses
4. Mortgage Restructuring
Many landlords benefit from:
- Switching to lower-interest products
- Extending mortgage terms
- Using interest-only mortgages for cash-flow flexibility
5. Claiming All Other Allowable Expenses
Even though mortgage interest is restricted, you can still fully claim costs like:
- Repairs and maintenance
- Agency fees
- Insurance
- Service charges
- Accountancy fees
TTAS helps ensure landlords claim every HMRC-approved expense.
Section 24: What to Expect in 2025
As of 2025:
✔ Section 24 remains in place
✔ No government repeal has been announced
✔ Pressure from landlord associations continues
✔ More landlords are choosing incorporation or selling low-performing properties
It’s more important than ever to have a tax strategy, not just file a return.
How TT Accountancy Services Supports Landlords
TTAS works with landlords across London to help them:
- Reduce Section 24 tax exposure
- File accurate Self-Assessment tax returns
- Structure property ownership tax-efficiently
- Improve rental profitability
- Manage buy-to-let portfolios strategically
Need advice?
Book a landlord tax consultation: https://ttaccountancy.com/contact
Section 24 is one of the most significant tax changes UK landlords have ever faced — and it continues to affect profits in 2025.
But with the right planning, restructuring, and tax strategy, landlords can:
✔ Reduce unnecessary tax
✔ Improve monthly cash flow
✔ Protect long-term property investment returns
TT Accountancy Services is here to help you navigate UK landlord tax rules with clarity and confidence.
