Ask any group of buy-to-let landlords why they are thinking about moving their properties into a limited company, and the same two words come up again and again: Section 24. It is the single biggest reason landlords have changed how they hold property over the last few years.
The frustrating part is that Section 24 is poorly understood. Many landlords know their tax bill has gone up but aren't quite sure why, especially when their rents and profits have not really changed. This technical guide explains the calculation, its limits and the company comparison; it is not a reason to assume a company will always leave more cash for the owner.
Section 24 is the nickname for the residential-property finance-cost restriction. It changed how unincorporated landlords obtain relief for qualifying finance costs, including mortgage interest. It was phased in between April 2017 and April 2020 and is now fully in force.
Before the restriction, a landlord could deduct mortgage interest in calculating rental profit. Under Section 24, qualifying finance costs are not deducted in that calculation. Instead, the taxpayer generally receives a 20% tax reduction for 2026/27, subject to statutory limits; restricted relief may be carried forward in some cases.