Not tax advice. HMRC rules include further limits and interactions with total income. Confirm figures with a qualified accountant.
Section 24 illustration
Compares a simplified “full interest deduction” model with a simplified current model using a 20% tax reducer.
Illustrates how restricting finance cost relief can increase tax versus deducting mortgage interest in full (pre-2017 model). Uses a simplified teaching formula — see HMRC / gov.uk — tax relief for residential landlords and your accountant for your position.
Inputs
Illustrative outcome
- Profit before finance (rent − other)
- £10,000
- Tax (pre-2017 full interest deduction)
- £2,400
- Tax (current rules illustration)
- £3,200
- 20% finance tax reducer (capped)
- £800
Extra tax vs full deduction (illustrative)
£800
× 5 years (simple, no discounting): £4,000
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