Section 24 annual cost — and what actually reduces it
Section 24 restricts mortgage interest relief on residential lettings to a 20% tax credit rather than a full deduction. This calculator shows your annual Section 24 cost, the likely saving from transferring income to a basic-rate spouse, and — on request — the break-even for full incorporation.
Rental income and costs (annual)
Ownership and tax band
Spousal transfer scenario (if applicable)
Incorporation comparison (optional)
Your Section 24 impact — 2025/26
Rent minus expenses, with interest added back.
Rent minus all costs including interest.
Annual Section 24 cost
£3,100
This is how much more tax you pay per year because mortgage interest is only a 20% credit, not a full deduction.
Spousal transfer saving
£4,000/yr
Transferring rental income to your spouse via a Deed of Assignment could save this each year indefinitely. Setup cost typically £600–£900.
Notes on the calculation
Section 24 only affects higher- and additional-rate taxpayers. If your total income (salary plus rental profit) stays within the basic-rate band, your marginal rate on rental is 20% and the Section 24 credit fully offsets the added-back interest — the effective tax change is zero. The calculator reflects this: basic-rate taxpayers typically see a Section 24 cost of zero or near-zero.
Spousal transfers almost always outperform incorporation for single-property portfolios. A Deed of Assignment or Form 17 + Declaration of Trust shifts rental income to a basic-rate or non-earning spouse at a setup cost of £600–£900. Setup is recovered in months, not years. Incorporation makes sense only at portfolio scale (typically 4+ properties with higher-rate exposure), or in premium-rent areas like Northwood where per-property Section 24 cost is unusually high.
The incorporation break-even is a rough guide, not a decision. This calculator applies standard assumptions — SDLT at market value plus 5% company surcharge, legal and refinance costs of roughly £3,500, and an SPV mortgage rate premium of about 0.7% on the full interest amount. The actual figure depends on your specific mortgage rates, lender availability, and portfolio structure. A specialist's incorporation model will typically move the break-even by 1–3 years in either direction.
Partial mitigation is often the right answer. Options beyond full restructuring include: re-mortgaging to a lower-rate product to reduce total interest (and therefore Section 24 exposure), paying down debt with surplus cash to reduce leverage, or accepting Section 24 as a cost of doing business where the property would not justify restructuring fees. The calculator shows the numbers; a specialist helps you choose between options.
Before you restructure
A specialist will check whether Section 24 even affects you.
Many landlords we speak to have been told they need to incorporate or restructure, when in fact their Section 24 exposure is smaller than the fees it would cost to mitigate. The diagnostic quiz matches you with a specialist in 48 hours, free of charge.
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