• Property Tax and Interest Calculator

    A ready-reckoner for Tracker and Fixed rate mortgages.

  • Section 24 affects all landlords with mortgages. This tool has been designed to show landlords the true impact of tax and interest rate changes on the nett return from their investment. 

    You can use this ready reckoner to assess the viability of your buy-to-let. It can help you make decisions about how to adjust a portfolio, or to change your mortgage position, in order to deal with the changed financial outlook.

    First, it looks at the position pre-April 2017 before Section 24 had been introduced. At that point all financing costs were deductible from gross income.

    Next, it looks at how Section 24 impacts on your post-tax position, but before the Base Rate hikes since December 2021.

    Finally, it shows you how Section 24 combined with Base Rate increases (or Fixed Rate increases, depending on what sort of mortgage you have) impact upon a landlord's true post-tax position.

    (Please note, the calculator refers only to Interest-Only mortgages. The calculator cannot take account of your personal tax situation in any way, and it is recommended that you use this tool solely as a guide to the implications of Section 24: more detailed advice should be sought from a qualified accountant or tax professional once you have a broad idea of the situation)

  • Let's start with some base information

  • Rental Income from the Property

  • Property Value

  • A couple of final pieces of information in order to calculate your position

  • You have chosen a TRACKER Mortgage

    Tracker Mortgages are based on a percentage above the Bank of England's Base Rate. Simply input what that additional percentage is in the boxes where indicated

  • That's it! All your calculated outcomes are below

    1: Pre-Section 24; 2: With Sec 24 but pre-Base Rate Rises; 3: Full impact of rate rises
    • Here is the Landlord's post-tax position Pre-Section 24  

    • This is how much this landlord was making after tax, before the base rate hikes started (and WITHOUT the impacts of Section 24)

    • Landlord's position under Section 24, but BEFORE base rate hikes 

    • This is how much this landord made after tax once Section 24 was fully implemented, depending on marginal income tax rate of the landlord

    • Landlord's position under Section 24, PLUS base rate rises 

    • This is the post-tax position with base rate at latest level. A landlord can use it to calculate the impact of base rate predictions - will your buy to let remain viable?

    • Note 1. Interest-only mortgages

      Note 2. Unincorporated landlords

      Note 3. Does not take into account users' own personal tax allowances, assumed to be utilised against PAYE, pension, or other income

      Note 4. Not intended as advice; seek advice from a qualified accountant about personal tax situation

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  • You have chosen a FIXED RATE Mortgage

    Fixed Rate mortgages run for an agreed term, typically 2 or 5 years, and do not vary with the Bank of England's Base Rate changes...until it comes time to renew. At that point sharp increases can be encountered, creating radically different outcomes for landlords in their POST-TAX nett position.

  • That's it! All your calculated outcomes are below

    1: Pre-Section 24; 2: With Sec 24 but pre-Base Rate Rises; 3: Full impact of rate rises
    • Here is the Landlord's post-tax position Pre-Section 24 

    • This is how much this landlord was making after tax, at the PREVIOUS Fixed Rate, but also WITHOUT the impacts of Section 24

    • Landlord's position with Section 24 tax changes, at the PREVIOUS Fixed Rate 

    • Post-tax position, depending on marginal income tax rate of the landlord

    • Landlord's position with Section 24 tax changes, at the INCREASED Fixed Rate 

    • Post-tax situation under new increased Fixed Rate position

    • Note 1. Interest-only mortgages

      Note 2. Unincorporated landlords

      Note 3. Does not take into account users' own personal tax allowances, assumed to be utilised against PAYE, pension, or other income

      Note 4. Not intended as advice; seek advice from a qualified accountant about personal tax situation

  • Costs incurred on the rental

    For a clear look at the post-tax position on your rental, this ready reckoner keeps costs at ZERO, but remember that there are further (tax-deductible) costs of being a landlord. For instance:

  • Have you found this information useful?

    Would you welcome a chat with the team to consider your options? We are landlords ourselves!
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  • A little bit of info about Section 24 (of the Finance Act 2015)

    Why it was created, and the key things to understand about it

  • So, what is Section 24? Simply, it prevents the deduction of financing costs (buy-to-let mortgages, for instance) from the landlord's income tax bill. Tax is paid on the full revenue generated in rent, and an offset is granted back in the form of a tax credit at the basic rate of tax (20% at the current time).

    The claimed purposes of this change, introduced from April 2017 in a phased way across four years, and now fully in force, were:

    • To curb the private rental market by making it less attractive to landlords
    • To stop higher earners from claiming back large amounts of tax relief.
    • To increase the level of housing stock and give first-time buyers a greater opportunity to get a foothold on the property ladder.

    One final important fact about the impact of Section 24: if you also receive a salary from another job, the strongly increased taxable income (as opposed to just the profits previously) could bump you into the next tax band which can increase the amount of tax you pay overall.

    The impacts are clear from the ready reckoner: remember, tax is levied on revenue, not profit, an almost unheard-of tax policy - other businesses are able to deduct their full costs of financing their operations.

    See our separate blogs for ways to mitigate the impacts, which we don't pretend are easy or necessarily achievable for many smaller landlords.

    Again, for more detailed tax advice please refer to your accountant or qualified tax professional advisor: this tool is intended solely as a broad guide to the rental implications of Section 24 and of interest rates for landlords and should not be taken to represent formal tax advice. No responsibility is accepted for decisions taken as a result of using this ready reckoner.

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