Tax Relief on Mortgage Interest: What UK Landlords Can Still Claim in 2026

If you own a buy-to-let property with a mortgage, you are paying interest every month. The obvious question is: can I claim tax relief on that mortgage interest?

The answer is yes—but the way it works has changed significantly since Section 24 of the Finance Act 2015 was phased in. The old system of deducting mortgage interest as an expense is gone. In its place is a tax credit that works very differently depending on your tax bracket.

How Mortgage Interest Relief Works Now

Since April 2020, individual landlords can no longer deduct mortgage interest (or other finance costs) from their rental income before calculating tax. Instead, you receive a basic rate tax reduction—a credit worth 20% of your finance costs.

In practice, this means:

• You declare your full rental income on your tax return
• You deduct allowable expenses (repairs, letting fees, insurance) but not mortgage interest
• You calculate tax on that figure at your marginal rate
• You then subtract a 20% tax credit based on the lower of: your finance costs, your rental profits, or your adjusted total income

What Counts as "Finance Costs"?

The 20% tax credit applies to more than just mortgage interest. HMRC includes:

• Mortgage interest payments
• Interest on loans to buy furnishings
• Fees incurred when taking out or repaying mortgages or loans
• The interest element of alternative finance arrangements (e.g. Sharia-compliant products)