Buy-to-let mortgage interest relief explained
Individual landlords can no longer deduct mortgage interest from rental income before tax; instead they receive a basic rate tax credit.
6 min read · Updated 2 August 2026
Overview
Individual landlords can no longer deduct mortgage interest from rental income before tax; instead they receive a basic rate tax credit.
How the credit works
You calculate rental profit before deducting finance costs, then apply a 20% tax credit against the finance cost separately.
Higher rate impact
Higher and additional rate taxpayers lose out because relief is capped at basic rate, effectively increasing their taxable income.
Limited company alternative
Companies can still deduct mortgage interest as a business expense, which is why many landlords consider incorporation.
Getting advice
The right structure depends on portfolio size, other income and long-term plans, so take advice before restructuring borrowing.
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This guide is general information for UK landlords and letting agents, not legal advice. Rules differ across England, Wales, Scotland and Northern Ireland — check your local requirements or take advice before acting.