Section 24: mortgage interest relief

If you personally own a residential buy to let property, you will be impacted by the so-called “section 24” tax changes, which will increase the amount of tax you pay on your rental income. Here at Provestor, we can advise property investors on how to mitigate this change.

What is section 24?

As of April 2021, income tax relief landlords receive for residential property finance costs (mortgages) will be restricted to the basic rate of tax. This means that the amount of income tax paid on rental income will increase as a result, particularly if you become a higher or additional rate taxpayer.

There a number of strategies available to property investors to mitigate the impact of section 24.

Tailored tax consultations to help you navigate section 24

As a starting point, we recommend a one-to-one tax consultation with a Provestor property accountant.

During your 45 minute consultation, our team will discuss your portfolio, position and goals and outline the options available to you.

Pre-call fact finding

Before the call we'll ask you to send over details of your current portfolio for us to review

One-to-one tax call

A 45 minute phone call with a property tax accountant to discuss your position and objectives

Advice and options

We'll outline the options available to you, and help you decide on your next course of action

Phone call emailed to you

We'll record and email the call to you, so you can listen back, any time

Learn more

Common options to mitigate section 24

During your tax consultation we'll discuss various options available to you, which could include the following popular approaches

Using a deed of trust or partnership

You may be able to use a deed of trust or partnership to transfer rental income to your spouse. This is particularly advantageous if your spouse has a low income, or pays tax at the basic rate.

Paying off mortgages

Whilst paying off a mortgage will not be beneficial from a tax perspective, it will give you the opportunity to increase your monthly income from your properties, which could offset the decrease due to section 24.

Property portfolio review

The marginal rates of tax can far exceed the headline income rate. It can therefore be in your best overall interests to sell weaker properties in your portfolio. You may also find that some properties are no longer profitable and may be worth selling.

Converting to holiday lets

If you are able to convert a property to a holiday let, and achieve the furnished holiday let criteria, you may be able to mitigate the impact of section 24. There are a number of tax advantages related to running a holiday let, including the ability to claim mortgage interest relief.

Book a section 24 property tax consultation today

Property tax consultation

£249Including VAT

Book a 45-minute property tax consultation with one of our accountants for one-to-one advice and guidance.

Our clients receive these property tax consultations as part of our service. Therefore, if you appoint us as your accountant we'll refund the cost of this consultation in full.

Our consultation includes:

  • A one-to-one telephone call with an accountant

  • Pre-call fact-finding, to help us understand your goals

  • Advice and guidance on topics of your choice

  • We'll record the call and email it to you, so you can listen back, any time