What is Section 24 tax?

Section 24 was announced in the 2015 summer budget and was phased in over 5 years to be in full effect from April 2020.  The income tax relief that landlords receive for residential property finance costs will be restricted to the basic rate of tax (20%).  This will slowly eliminate tax relief on mortgage interest payments which, before Section 24, was deductible from your income tax.  Since Section 24 was introduced landlords will now have to pay all tax on their rental income whilst being able to claim back 20% on mortgage interest costs.

Some landlords could experience financial difficulties because of Section 24 if they have large mortgage commitments as they could be pushed into the higher tax bracket with their rental incomes.

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