Landlord Tax After Section 24: What You Can Still Claim
Mortgage interest relief is now a 20% tax credit, not a deduction — and it pushes some landlords into a higher band on paper. Here is what you can claim, what changed, and when a company makes sense.
Section 24 changed the arithmetic of being a landlord, and the effect is still catching people out years later — particularly landlords who are basic-rate on their real income but higher-rate on paper once the rent is added without the interest taken off.
What Section 24 actually did
Before, mortgage interest was an expense: rent in, interest out, tax on the difference. Now the full rent is taxable and the interest gives a 20% tax reduction instead.
| Old treatment | Now | |
|---|---|---|
| Rental income | £15,000 | £15,000 |
| Mortgage interest | −£8,000 | Not deducted |
| Other costs | −£2,000 | −£2,000 |
| Taxable profit | £5,000 | £13,000 |
| Then | — | Less a £1,600 tax reduction (20% of £8,000) |
The knock-on effects matter as much as the tax: a higher taxable income can reduce the personal allowance above £100,000, trigger the High Income Child Benefit Charge above £60,000, and move you into the higher rate band.
What you can still claim
- Letting agent and management fees
- Landlord insurance
- Ground rent and service charges
- Council tax and utilities, where you pay them
- Repairs and maintenance
- Accountancy fees
- Advertising for tenants
- Replacement of domestic items — like-for-like only
Repairs versus improvements
A repair restores; an improvement upgrades. Repairs come off rental income now. Improvements are added to the property's cost and reduce your capital gain when you sell, which is worth having but years away. Replacing a worn kitchen with a similar one is a repair. Adding a second bathroom is not.
The property allowance
If gross rental income is £1,000 or less, it does not need declaring at all. Above that, you can choose to deduct the £1,000 allowance instead of actual expenses — worth it only where real costs are lower, which is rare with a mortgage.
Making Tax Digital applies to landlords too
Rental income counts towards the qualifying income threshold for MTD for Income Tax in exactly the same way as trading income, and jointly owned property counts on your share. If your property income takes you over the threshold, quarterly updates apply to you.
Getting help with this
AJH Accountants handles landlord and property accounting for clients across the UK. We file the return, tell you what you can claim, and deal with HMRC on your behalf, so nothing depends on you remembering a deadline.
See how our landlord and property accounting service works, or send us a quotation request and we will call you back. You can also call the office on 01204 840303.
Originally published at ajhaccountant.co.uk/blog/landlord-tax-section-24-what-you-can-claim.