Landlord take-home, after Section 24.

UK Landlord Take-Home (with Section 24)

Estimate your take-home from a UK buy-to-let after Section 24 (the mortgage interest tax credit restriction). Mortgage interest is no longer deductible — instead a 20% basic-rate tax credit applies, which is why higher-rate landlords pay more than they used to.

How landlord tax actually works (Section 24)

1. Rental income minus allowable expenses (excluding mortgage interest) = taxable rental profit. Allowable expenses include letting agent fees, insurance, maintenance, and council tax during voids. Capital improvements are NOT deductible.
2. Add taxable rental profit to your other income to determine which tax band you sit in. Rental profit stacks on top of salary, self-employed profit, etc.
3. Pay income tax on the full rental profit at your marginal rate (20% / 40% / 45%). Not minus mortgage interest.
4. Get a 20% basic-rate tax credit on mortgage interest, capped at the lower of: mortgage interest, rental profit, or total taxable income.
5. The credit can't reduce tax below zero and isn't refundable.

Worked example — £18k rent, £6k mortgage, £40k other income

• Rental income: £18,000
• Allowable expenses (excluding mortgage): £2,000
• Mortgage interest: £6,000
• Other income (employment): £40,000
• Rental profit before mortgage: £16,000
• Total taxable income: £56,000 — partly in higher-rate band
• Tax attributable to rental (gross, before credit): £4,346
• Section 24 credit (20% × £6,000): £1,200
• Net rental tax: £3,146
• Cash take-home from rental: £18,000 − £2,000 − £6,000 − £3,146 = £6,854

The 'should I incorporate?' question

Section 24 hits hardest for higher-rate landlords. Inside a limited company:

• Mortgage interest is fully deductible (Section 24 doesn't apply to companies).
• Profit is taxed at corporation tax (19% / 25% with marginal relief), not personal rates.
• You then pay dividend tax to extract the profit — OR retain it for further investment, paying income tax later when you draw it down.

The decision hinges on:

• How big is the portfolio? One BTL rarely makes the costs worth it. 5+ properties usually does.
• Are you reinvesting or extracting? Reinvesting heavily favours the corporate route.
• What's the SDLT cost of moving existing properties? Transferring to a Ltd Co is a sale at market value — you pay SDLT and potentially CGT on the way in.
• Will lenders give you a mortgage at corporate rates? Limited company BTL mortgages exist but have higher rates and fees.

Take Home models all of this with current SDLT rates, CGT exposure, and mortgage market assumptions to give you a real number, not a heuristic.

Where Take Home helps

• Section 24 calculation per property — most generic calculators get the credit cap wrong when other income matters.
• Incorporation modelling with current SDLT, CGT, and limited company BTL mortgage market assumptions.
• Furnished Holiday Letting treatment if relevant (different rules, different reliefs).
• Replacement of Domestic Items relief tracking — a frequently missed deduction for furnished lets.
• Mortgage product reviews if you're approaching the end of a fix — we'll flag rate changes affecting your post-tax yield.