Section 24 of the Finance (No. 2) Act 2015 fully restricted finance cost relief for individual residential landlords from April 2020. Six years on, the impact is no longer theoretical. Higher interest rates between 2022 and 2025 amplified the pain, and we have spent the last eighteen months helping landlords decide whether to incorporate, form a partnership, sell, or hold on. There is no universal answer, but there is a structured way to find yours.
How Section 24 actually works
Individual landlords can no longer deduct mortgage interest as a business expense against rental profits. Instead, they receive a basic-rate (20%) tax credit on finance costs. For higher and additional-rate taxpayers, this means rental income inflates total taxable income, often pushing landlords into the 40% or 45% bracket, withdrawing personal allowance, triggering the High Income Child Benefit Charge, and reducing pension annual allowance.
The mathematics matter. A landlord with GBP 60,000 of rental income and GBP 40,000 of mortgage interest used to declare GBP 20,000 of profit. They now declare GBP 60,000 of taxable rental income and receive a GBP 8,000 credit, which is worse than break-even once higher-rate tax bites.
Route one: incorporation into a limited company
Companies are unaffected by Section 24 and deduct interest in full. Corporation tax sits at 19% to 25%, often lower than personal rates. But incorporation is not free.
- SDLT: transferring property to a company is a chargeable transaction unless partnership relief or another exemption applies.
- CGT: gains crystallise on transfer at market value. Incorporation relief under TCGA s162 can defer this where the rental activity qualifies as a business, but HMRC scrutinises passive portfolios.
- Refinance costs: mortgages must be redrawn at BTL-limited-company rates.
For portfolios of four or more properties where the landlord spends genuine time on management, incorporation often saves five and six-figure sums over a decade.
Route two: property partnerships and LLPs
A partnership between spouses or family members can flatten income across multiple personal allowances and basic-rate bands. An LLP adds limited liability. Crucially, transferring properties from a partnership to a company can attract SDLT partnership relief, materially reducing incorporation costs if structured at least three years in advance.
HMRC will challenge sham partnerships. There must be genuine joint ownership, shared decision-making, and a documented profit-sharing arrangement that reflects contribution.
Route three: hold, sell, or hybrid
For one or two properties with modest leverage, the admin and cost of incorporation rarely pays back. For others, selectively selling the highest-yield, lowest-gain properties and retaining the rest can rebalance a portfolio. We also see landlords gifting property to adult children for university funding, using CGT holdover where conditions are met.
What we changed in 2026
The 2025 Autumn Budget tweaked CGT rates and confirmed the abolition of the Furnished Holiday Lettings regime from April 2025. Both push more landlords to revisit structure. We now run a "Section 24 stress test" for every property client, modelling five years forward under three interest-rate scenarios.
How PushDigits structures the decision
Our business advisory team builds a comparative ten-year model showing post-tax cash retained under each structure. We coordinate with mortgage brokers, conveyancers, and where needed, an independent valuer. Tax computations sit alongside tax planning for the wider family, because incorporation often shifts dividend strategy, pension contributions, and inheritance positioning at the same time.
If you are weighing your options, book a Section 24 review or read our property sector overview. We work with landlords from single-property accidental letters to portfolios above 80 units across London and the South East.