Last reviewed: June 2026
TL;DR- Owner-occupiers receive no income tax relief on mortgage interest payments on their main home - mortgage interest is not a deductible personal expense.
- Landlords (individuals) can no longer deduct mortgage interest from rental income - they receive a 20% basic rate tax credit on finance costs instead, under Section 24.
- Limited company landlords can still deduct mortgage interest as a business expense before calculating corporation tax.
- The Mortgage Interest Relief at Source (MIRAS) scheme for owner-occupiers was abolished in April 2000 - there is no current equivalent.
Owner-Occupier Mortgage Interest: No Relief
Owner-occupiers in the UK receive no income tax relief on mortgage interest payments on their primary residence. Mortgage interest on a home is a personal expenditure and is not deductible against income for tax purposes. This has been the position since Mortgage Interest Relief at Source (MIRAS) was abolished in April 2000. There is no current UK scheme providing income tax relief on residential mortgage interest for owner-occupiers.
The main tax benefit for owner-occupiers relates not to interest payments but to the disposal of the property: Private Residence Relief (PRR) exempts gains on the sale of a main home from capital gains tax, provided the property has been the owner's principal private residence throughout the period of ownership (with some qualifying exceptions for the final period of ownership).
Landlord Mortgage Interest: Section 24
Individual landlords holding rental properties in their personal names cannot deduct mortgage interest as an expense from rental income. Before Section 24 of the Finance Act 2015 was phased in (2017-2020), landlords could deduct all finance costs from rental income before calculating taxable profit. Since April 2020, the full restriction applies: landlords receive a tax credit equal to 20% of finance costs (primarily mortgage interest) rather than a full deduction. For basic rate taxpayers, the effect is broadly neutral. For higher rate (40%) and additional rate (45%) taxpayers, the restriction significantly increases the effective tax rate on rental income.
Limited Company Landlords: Full Deductibility Retained
Limited company landlords are not subject to Section 24. A company can deduct mortgage interest as a business expense against rental income before calculating corporation tax. This is a significant tax difference from individual ownership for higher rate taxpayers with mortgaged rental properties. The corporation tax rate is 25% for companies with profits above £250,000 (19% small profits rate below £50,000, with marginal relief between). Profits extracted from the company as dividends or salary attract additional personal tax, so the overall tax comparison between personal and company ownership requires specialist modelling.
Other Mortgage-Related Tax Considerations
Beyond interest relief, other tax considerations for mortgaged properties include: stamp duty land tax (payable at purchase); capital gains tax on disposal of investment properties (not applicable to main home with PRR); inheritance tax on property in the estate; and the non-resident landlord scheme (for overseas landlords receiving UK rental income). Each of these requires specialist tax advice for specific circumstances.
Frequently Asked Questions
Was there ever mortgage tax relief for owner-occupiers in the UK?
Yes. Mortgage Interest Relief at Source (MIRAS) provided income tax relief on mortgage interest for owner-occupiers. It was progressively restricted from the 1980s onward and abolished entirely in April 2000. There is no current proposal to reintroduce equivalent relief for owner-occupiers.
How does the Section 24 restriction work in practice?
A higher rate taxpayer landlord with £15,000 in rental income, £10,000 in mortgage interest and £2,000 in other expenses has: profit of £3,000 (£15,000 - £10,000 - £2,000). Under old rules: taxed at 40% on £3,000 = £1,200 tax. Under Section 24: taxed at 40% on £13,000 (£15,000 - £2,000 allowable expenses, excluding mortgage interest) = £5,200, minus 20% credit on £10,000 interest = £2,000. Net tax = £3,200. The restriction more than doubled the tax bill in this example. Real-world figures require specialist accountancy advice.
Can I claim any relief on mortgage arrangement fees for a rental property?
Mortgage arrangement fees for rental properties may be deductible as a finance cost, subject to HMRC's rules on finance costs and the specific nature of the fee. Specialist tax advice from an accountant experienced in property taxation should be sought for the treatment of specific mortgage-related costs on rental properties.
Does the Section 24 restriction apply to holiday lets?
The Furnished Holiday Lettings (FHL) regime, which previously allowed full mortgage interest deductibility (among other benefits), was abolished from 6 April 2025. From that date, income from furnished holiday lettings is treated as ordinary property income and is subject to the Section 24 restriction in the same way as other residential lettings for individual landlords. Specialist tax advice is required for anyone previously operating under the FHL regime.
