Landlord Guide To Section 24 (The Game-Changing Tax Rule)

Landlord Section 24

‘Section 24’, the controversial amendment to the UK tax code, which has restricted landlords’ from deducting “finance costs” incurred by a landlord’s rental business (including interest payments on loans, mortgages and overdrafts, and any costs associated with arranging them) from their taxable rental income.

But obviously the amendment is really all about mortgage interest payments, because that’s where and how it’s really going to impact landlords en masse.

In other words, the interest on mortgage debt is no longer tax deductible like it used to be, which means many landlords have found themselves with significantly higher tax bills than before.

Needless to say, section 24 has been game-changing – in the worst possible way – it’s resulted in many rental businesses running on wafer thin margins, if not completely uneconomical, for private landlords.

If you’re a landlord or interested in becoming one, it’s critical to understand how Section 24 of the Finance (No. 2) Act 2015 might impact your finances, ’cause the reality is it could easily cripple your business and/or shape your future plans.

Page contents

Overview of what Section 24 means for landlords and their tax liability for their rental business

  • Section 24 applies to all landlords with residential rental properties in the UK.
  • Landlords used to be able to offset “finance costs” (e.g. interest payments on mortgages) against their taxable rental profits, that is no longer the case.
  • The Government suggests 1 in 5 landlords was affected by the change.
  • The restriction was introduced in April 2017, and was fully implemented by 2020 – 2021.
  • Landlords can claim a tax reduction at the restricted rate of basic rate @ 20% on mortgage interest payments (this means higher rate taxpayers can no longer claim the tax back on their mortgage interest payments, as the credit only refunds tax at the basic 20% rate).
  • Lower rate taxpayers may find themselves pushed into a higher rate of taxation due to the change (because now landlords can’t offset the interest on loans against their tax liability, therefore the cost will be added to the taxable income total on their tax return).
  • This will mostly affect landlords with large mortgage debts, especially portfolio landlords. It’s theoretically possible that some may find themselves paying more tax than they have actual income. Scary!

Does Section 24 apply to you?

Meh, I dunno.


I hope not.

  • Section 24 applies to individuals with residential property businesses;
  • They do not apply to companies.
  • They do not apply to land and property dealing or development businesses, commercial lettings or Furnished Holiday Lets.

So if you don’t manage your BTL business through an incorporated company and your rental property(ies) have interest bearing debt, then Section 24 will almost certainly apply. The question of how much it will impact you will depend on which tax band you fall into.

If your rental business is loving life debt free (congratulations), then Section 24 will not impact you.

My suggestion is to talk to a landlord tax accountant to determine your position so you can plan accordingly and make any necessary provisions to your BTL business.

Actually, that makes for a perfect opportunity to segue onto my boilerplate disclaimer – you know the drill: I’m not a qualified tax professional, so none of this is financial or legal advice. In fact, I’m offering the exact opposite of that (I’m not actually quite sure what that means in real terms, but you get my point).

The definition of “finance cost” (which expenses are not tax deductible under Section 24)

Section 24 states that from 2021, expenses that fall under “finance costs” will no longer be tax deductible, but obviously that alone is kind of ambiguous so isn’t helpful.

What “finance costs” is referring to is any cost associated to accessing finance on a rental property, including interest on loans and incidental costs, such as arrangement fees and commission.

As per the HMRC Property Income Manual (PIM2054):

Interest and other finance costs on loans taken out for a property business which involves the letting of residential properties.

Any payments which, although not described as interest, are made in connection with a relevant loan and are economically equivalent to interest in the hands of the recipient.

Any incidental costs incurred in obtaining the loan. This includes items such as fees or commission payments, but would exclude, for instance, exchange rate losses on a loan taken out in a currency other than sterling.

So, in other words, the following expenses are not tax deductible:

How Section 24 works

As part of the 2015 Summer budget, the Chancellor of the Exchequer, the pompous twit George Osborne, announced that from 2017, the Government will progressively stop landlords from being able to use the full cost of our mortgage interest payments as an expense to offset against our tax bill, which ultimately means many private BTL landlords will see their tax bill go through the freaking roof!

Landlord tax liability examples (before and after Section 24)

HMRC provide a couple of case studies to demonstrate how Section 24 can impact a landlord’s taxes (although the tax rates and bands they use are now out of date).

I’ll use one case study (example #2) as a template but I’ll adjust it to use the latest Income Tax rates (2023) and adjust the figures to show you how a landlord can get pushed into a higher tax bracket:

Key figures

  • Tax relief available for mortgage interest payments – 20%
  • Personal Allowance (Up to £12,570) – 0% tax rate
  • Basic rate (£12,571 to £50,270) – 20% tax rate
  • Higher rate (£50,271 to £125,140) – 40% tax rate
  • Additional rate (over £125,140) – 45% tax rate

Case study: impact before and after Section 24

John’s an individual with self-employment income of £47,000 and rental income from residential property of £18,000 per annum.

His mortgage interest is £8,000 per year.

Property income calculation:
Rental income = £18,000
Finance costs (£8,000) = nil deduction
Other allowable expenses = £2,000

Property profits = £16,000

Total income = £63,000

Income Tax calculation:
£12,570 x 0% = £0
£37,700 x 20% = £7,540
£9,730 x 40% = £5,092

Income Tax Total: £12,632

Less 20% tax reduction for finance costs:
£8,000 x 20% = -£1,600

Final Income Tax = £11,032

After the introduction of Section 24, John has become a higher rate taxpayer because of the change as his total income is more than the higher rate threshold of £50,270.

Tax bill is £11,032 with Section 24.
Tax bill is £7,540 before Section 24.

Needless to say, that’s a frightening change from what we were used to. End of a golden era for many. Sigh.

The impact of Section 24 on landlords

As a result of this change, many thousands of landlords will find themselves being taxed on loss-making buy-to-let properties and see massive increases in the percentage of tax payable. Many will be shoved upwards into a higher rate tax bracket, even though in reality they will not be making a single penny of extra income!

It will also mean that the idea of becoming a landlord will become less feasible and attractive to many people.

It should also be noted that the Government already collects tax on the mortgage interest paid by landlords – it takes it from the profits made by the mortgage lenders. So not only does the legislation victimise individual mortgaged landlords, it’s also a double taxation policy.

And of course, inevitably, as it always does, these extra costs will quickly find their way filtering down to the bottom of the chain, all the way to the tenants, which will further increase rental prices in an already unmanageable market.

I refuse to believe the Government aren’t aware of how this will pan out, because it really just boils down to basic economics (i.e. if you increase production costs, the retail price of the commodity has to increase), so it kind of makes you wonder who screwed who to make this ludicrous legislation happen. Others feel the same, and that’s why they’re calling it the “Tenant Tax”

How can landlords offset and manage Section 24?

First and foremost, I must reiterate the point I have already made, which is to talk to an accountant that is familiar with landlord tax, and find out how much of an impact Section 24 has on your finances, and then plan accordingly. Do the maths, and stress-test the figures.

I’ve already written several posts on how landlords can save money, which may help you reshape and maximise your profits. But I’ll go over a few of the main ones below.

While you should already be doing the following regardless, for both short and long term gains, I appreciate we don’t all start swimming until we’re thrown into the deep end…

*The Landlord kicks you into the deep end*

  • Remortgaging
    It’s still a massive mystery to why so many homeowners (not just landlords) don’t look at remortgaging at every given opportunity. Relatively speaking, it’s by far the easiest and quickest way to massively rein in the outgoings!

    Even if you can find a mortgage product that offers a puny 0.1% reduction in interest, you could still potentially save thousands, and therefore instantly absorb the costs of the repulsive new tax legislation in one hit!

    If you’re interested, here’s a more detailed write-up of my most recent experience of remortgaging a BTL.

  • Make a lump sum payment to reduce mortgage
    You never know, reducing some of your mortgage debt with lump-sum payments may work out better for you. Equally, it might be worth switching to a repayment mortgage if you’re currently paying interest-only. This is where a good tax accountant will be invaluable.
  • Regularly look for better deals
    I honestly believe most landlords miss a trick when it comes to service renewals (i.e. insurance, agency fees etc.), and that’s mostly due to obscene levels of laziness.

    Companies that work on the premise of annual subscriptions prey on laziness. They rely on people to avoid the 10-20 minute chore of looking for a better deal when it’s time to renew a policy, which is typically once a year. The sad reality is, most people are THAT lazy, so they just go ahead and renew the policy with their existing providers.

    9 out of 10 times, your existing provider won’t be offering you a competitive deal. They’ll be offering you the “lazy asshole” deal, which is usually 30% more expensive.

    Last time I shopped around before renewing my landlord insurance policy I saved £250, and it took about 20 mins.

    PLEASE, just shop around when it’s time to renew! Do it for me and your children.

  • Minimise void periods
    Be organised and minimise void periods in-between tenancies.

    Think about it, by simply slowing down the process of finding new tenants by 2 weeks, you can easily lose £400 in rent (based on rent being £800 PCM). Even if you half that period by working a little quicker, you’ll save £200. It really does boil down to being organised and prepared.

    There’s more information over at the finding tenants quickly section!

  • Obey the law
    This is a bit of a quirky one, and perhaps it has no place in this list. But screw it, I’m doing it…

    Landlords are continuously being persecuted for failing to comply with the law. Actually, this is probably one of the quickest ways to evaporate profits into a puff of smoke, and it’s definitely more devastating than any tax clause.

    Be a good boy, comply with your landlord legal obligations if you aren’t already. It’s so much cheaper than being sued.

  • Avoid & prepare for bad tenants
    See, the thing is, while this whole tax legislation is unfair and will jeopardise your monthly Range Rover lease payment, one asshole tenant can jeopardise your entire fortune.

    Reduce the chances of harbouring donkey tenants by undergoing thorough tenant referencing. But just as crucially, always prepare for donkeys (because sometimes they’re just unavoidable) by keeping tenancies short, having a tenant and considering RGI (Rent Guarantor Insurance).

    Let me reiterate, good tenants are crucial to turning a healthy profit. You will NEED good tenants to help you through the tough times.

  • Minimise tenant turnover
    The most important point in the list, in my opinion.

    If you have good tenants, don’t do anything stupid like unnecessarily increase rent. Keeping rent reasonable/low in exchange for retaining good tenants is almost always cheaper than pissing off good tenants and giving them a reason to terminate the tenancy.

    Despite popular belief, increasing rent isn’t the best way to survive in a tough environment. The best way to survive is keeping the cash flow steady, and you cannot do that without good tenants. I’m not saying don’t increase rent, I’m saying you might be better served being ‘reasonable’ over brash.

  • Scale back if you’re struggling
    If you’re fortunate enough to be a portfolio landlord, it might be worth selling a few of your properties and using the capital to reduce mortgage debt on the remaining. It’s a move that will undoubtedly be a kick to the ego to those that like accumulating, and it is a gamble, because the legislation might get squashed. It’s your call.

    It is extreme, but so is bankruptcy. There’s also a lot to be said about coasting through life in comfort as opposed to fear.

  • Offset every expense like your life depends on it
    Stack up every expense you can against your tax bill.

    While you may lose the ability to offset your interest payments, there maybe other expenses that you can offset, which you currently aren’t e.g. the cost in fuel for going back and forth to your BTL, the cost of your PC which runs your landlord software on, even the cost of communicating with your tenant and/or agent, and the food consumed during renovation periods etc. Again, a good tax accountant will let you know what you can get away with. The really good accountants will manage to find a way to offset pretty much anything, including a pair of nail-clippers.

    Offset every last fucking penny.

  • Operate as a company
    According to this article on ThisIsmoney it might be worthwhile operating your portfolio through a company if you have 10+ properties, because you’ll benefit from company tax breaks that are otherwise unavailable to private landlords. But bear in mind, there are added costs and hassle associated with running a company.

    Again, a good accountant will be invaluable here!

If you’re not doing ALL of the above (which is only the tip of the iceberg), I have no doubt in mind, you’ll be able to find ways to absorb more nose-bleed costs than your balance sheet is currently showing.

Workout how much this tax change is going to cost you, and make the changes you need to make in order to absorb the shit out of it.

WARNING: avoid Section 24 tax avoidance schemes (there are NO loopholes)


But the emergence of opportunistic dip-shits selling snake oil was always inevitable once Section 24 was thrown into the agenda.

Dan Niele, of Tax Policy Associates, a highly reputable Tax Lawyer with qualifications leaking out of his every orifice, has been at the forefront of the war against companies targeting unsuspecting landlords, offering baloney “tax saving” structures that are no more than ineffective tax avoidance schemes.

“Section 24 has created an industry of dodgy advisers preying on landlords with magic solutions. None of them work.

– Dan Niele, Tax Policy Associates

Alas, many landlords have already taken the bait – opted into structures that supposedly fixes the problem (i.e. reduces the tax burden created by Section 24) – only to discover they don’t work, and are now dealing with the harsh realities of further expenses to untangle themselves from the mess.

I know we all want to believe in the magic pill – one that will reduce our tax liabilities into a tiny stump, but I don’t know what to tell you, other than… there isn’t one!

Renting out properties is a simple business, so for better or worse, our options are simple and limited (as explained by Dan in this post, There are three choices, and only three choices.”):

  1. Incorporate – Instruct a proper tax adviser, incorporate a company, and move the business to that company. The mortgage interest will then be fully deductible against the company’s corporation tax.
  2. Don’t incorporate – in other words, continue as you are, bearing the cost of the section 24 non-deductible interest.
  3. Sell up – if section 24 simply makes your rental business uneconomical, you may need to sell-up.

If anyone is trying to sell you another option to reduce your tax liability, particular complex structures which involve Trusts, LLPs, offshore arrangements, then I suggest you take on board the words of one of the most highly regarded and qualified Tax Lawyers in the country, “not only are they very likely to fail when challenged, but the consequence could be much much worse than if you’d done nothing at all.”

So I really can’t overstate it enough, there are three choices, and only three choices. Don’t get lured in by weird and convoluted tactics because they sound impressive. Simple is cool. Simple is safe!

Good luck everyone!

Landlord out xo

44 Join the Conversation...

Guest Avatar
Benji 12th June, 2016 @ 13:51

Good post- although you've come late (which is a bit ironic considering your premature ejaculation problem).

1) Were you aware of the new tax legislation?

Yup, I had a whiff of it a couple of years ago from a very good source. But I didn't believe any government would be daft enough, let alone a Conservative one. It did give me pause for thought however and I made some adjustments. Since this came in I've been busy, hence not posting for a while.

2) are you going to support/donate to the campaign?

I've surrogate contributed from the £10000 NLA donation. I reckon Shelter should bung in a hefty contribution as well if they genuinely want to help tenants. End of the day though, however unfair, this will weed out the competition.

3) how is the legislation going to affect you?

I'll pay more tax but I'll be better off and do less work.

4) have you made any preparations for the change, or are you going to? I know of a few landlords that are currently scaling back their portfolio, and taking advantage of the insanely high property prices!

Yep, deleveraging, sold some and continuing to do so, putting up rents and building up reserves. I've sorted some of my mortgages onto 5 year fixes and kept the lifetime BofE +2% ers. I've now got out of DSS.

I've also got reserve plans of sweating the properties more but that would mean a lot more work.

"If you have good tenants, don’t do anything stupid like unnecessarily increase rent. Keeping rent reasonable/low in exchange for retaining good tenants is almost always cheaper than pissing off good tenants and giving them a reason to terminate the tenancy."

With no respect whatsoever, that is complete bollocks which I suspect you have posted to appease the HPC nutters. I have half a dozen properties I want to get rid of with crap yields. I have phased in 10% rent increases to good tenants as I want one of them to move to utilise the annual CGT allowance. They have all paid up and have no intention of leaving. It will be the same phased increase again next year.

I have been lucky with voids on the remainder, only getting them one at a time. Usually I get none for ages then 5 all at once. Because I have been in this position, I have been able to push rents. Market rent + 5 or 10%. How many times have you heard some muppet say they charge below market rate to get good tenants? Well if they are charging below average, it follows that someone (me!) is charging above. And it makes not a blind bit of difference in getting good or bad tenants. I've also noticed, definitely in a couple of cases, that letting agents are following suit and I have set new market levels.

Whilst you might not be much affected by this now, have you considered they might go further and scrap interest 'relief' altogether? And by the same rationale, why should you be able to offset costs of replacing a boiler but 'hard working homeowners' cannot? Another anti-business playing field leveller?

The Landlord Avatar
The Landlord 12th June, 2016 @ 20:06

I don't care in what context, I always like it when you talk about my ejaculation. In any case, better late than never. As long as the pipes get cleaned.

The steps you've taken are pretty interesting, and hopefully will encourage others to take the necessary steps to secure their investments. Out of curiosity, what was your specific reasoning for getting rid of DSS? And what rate did you manage to get for your 5yr fixed mortgages?

Despite your disclaimer, your voice in my head was very respectful and gentle, so thank you for that. We'll have to agree to disagree about rent increases. As for HPC... pfft.

And to answer your question, no, I haven't considered what would happen if offsetting costs against tax was revoked altogether.

Your absence was noticed and I'm flattered you took time out of your busy schedule to see an old friend!

Guest Avatar
Kitkat 13th June, 2016 @ 06:39

1. Yes I was aware of the legislation.
2. I might but not thousands. I will however tell other landlords about it.
3. As far as I'm aware it won't because my husband and I are 20% tax payers. I'm now wondering if I can greedily increase rents if it falls in line with other landlords.....
4. No prep because I need to read more (I prepare my own accounts so I'll have to know how it works a bit better than I know now)

Guest Avatar
Fred 13th June, 2016 @ 06:42

Thanks for the article, but please ease up on the constant facetious comments, it pads out the useful content no end and makes the good stuff harder to read...

The Landlord Avatar
The Landlord 13th June, 2016 @ 06:51

Nothing greedy about increasing rent as long it's reasonable and competitive, in my opinion!

Thanks for the feedback, appreciated :)

The Landlord Avatar
The Landlord 13th June, 2016 @ 06:53

You're welcome, and I'll do my best (but I think we all know how that will pan out)! :/

Guest Avatar
Phil 13th June, 2016 @ 07:44

Your strategy was always clearly more sensible that the 'portfolio' guys who have no respect for debt and what it really means. No other business owes what these guys do based on so little profit.....well maybe Littlewoods, BHS, Leeds United etc. Many see the monthly rent minus the mortgage as the debt and forget about the 30 mortgages and £5m debt.

A few years ago I watched a BBC program about a 'victim' who had bought a flat in Manchester following an investment presentation and they were going round the place with her. It was 4 years after purchase and clearly she had never been round it before. Buying houses like I buy tins of beans. For me, a signal to exit.

In a sea of nonsense I found your blog some almost immediately after watching that BBC program and it reminded me of the basics and a healthy fear of debt. I stemmed any expansion, recognised 3/4 houses outright was enough for anyone to survive and began to consolidate and save.

S24 is the thin end of the wedge. My hope is that it's aim is to stop borrowing and leveraging rather than 'landlording' (new word). But I expect the worst.

I get the unfairness and disparity - and as ever it's a super blog. However, I can see this changing for limited companies too. No deduction of mortgage interest for residential properties, no interest only never never mortgages and lending criteria based on income multiples not monthly calculations.

1) Yes. Was aware before this happened but like Benji thought the threat of it was to stem BTL.....never thought they would do it.

2) are you going to support/donate to the campaign? No....the tone is far too 'entitled'.

3) how is the legislation going to affect you? Makes me poorer and need to sell another - but will make me safer.

4) have you made any preparations for the change, or are you going to? Sold 2 of my already. Another to be sold this year and debt dropping to <15%.

Guest Avatar
Shaun 13th June, 2016 @ 09:36

I agree with Phil, this is the thin end of the wedge. They made a cynical calculation who they could rip off with the least howl of public outcry (who has sympathy for greedy plutocratic landlords?) and lost votes (the only thing a politician really cares about) and we became the targets.
Would not surprise me if the Gov do remove tax relief for all business borrowing as there are good economic arguments against it (though I will howl with outrage if they do!)

1/ Yes

2/ haven't decided yet

3/ 20% tax payer so no immediate effect

4/ As I foresee further attacks and already do all the things I can to keep my costs down the only thing left is to further reduce my mortgage exposure, a project that has been under way for a couple of years now but will be ramped up to give greater lee way in the future. My properties are pretty much at the market level for their location but will be keeping an eye on it.

Guest Avatar
Nicky 13th June, 2016 @ 13:50

1) Yes, had heard about it from a friend
2) I've given a small sum, yes
3) We may need to sell up; unlike many others we never set out to be landlords - we just couldn't sell our house in time to buy the new property so needed to rent it out instead. We don't actually gain financially from it at the moment - yes, the rent covers our interest-only ltb mortgage as well as the mortgage on our new home BUT if we had sold and then bought we wouldn't have a mortgage - our new home was considerably less than our now rented property was on the market for.
4) not yet....

Thank you for all the information you have on the website and blogs - as newbies to letting we couldn't have done it without you!

Guest Avatar
Stephen 13th June, 2016 @ 15:19

Hey Landlord, f u C k what Fred says above, I like your style of writing. It makes our business a little more fun. On to the serious business. I would like to cut off Osbourn's head and s h I t

down his f u C k I n g neck. He is a public schoolboy c u n t and I can only assume that he was butt f u C k e d by a gaggle of hairy a r s e d landlords when he as 12 to account for the stance he is taking.

Like most landlords, I have poured every penny I have into my 9 properties to see me into retirement - about 5 years to go. I have no desire to ponce off the government and would like to fund my own retirement. But f u c k it, if Osbourne is allowed to get away with what he is doing, I would rather burn the f u c k I n g lot and claim benefits. It appears that what ever you do to drag yourself out of poverty ( which I did by hard work) there is some c u n t in government that wants to put you back down there. Cheers and keep up the good blog. Steve

Guest Avatar
Emma Lou 13th June, 2016 @ 15:25

1 yes I was aware of the new taxation.
2 I shall give a small sum
3 most importantly, the new legislation will take me from paying very little tax as a 20% taxpayer, I only work a few hours per week, in a low paid job, alongside my portfolio, into being a higher rate tax payer. HMRC will work out out which tax bracelet you will be in by calculating your total income from rent, then removing allowable deductions (repairs, letting agent fees etc). Only then, will they allow interest relief at 20% on interest payments.

I am worried about how many people think they will not be affected because they are 20% taxpayers, they maybe now, but will not be using the new calculations.

4 I am waiting for the nod from my accountant as to which way is best (maybe inorporation ?) I am also holding off from buying anymore properties for now as I need to tweak my long term plans. I have remortgaged, to make sure I have got rid of any 80% LTV properties, and I am debating whether to pay lump sums off some off them ?

Overall, I am very concerned about future tax changes, as they will hit very hard, and I have invested blood, sweat and lots of tears, building up my portfolio, over the last 4 years.

Guest Avatar
Paul 13th June, 2016 @ 16:46

There are many very naive LL out there that even if they don't know about C24 will be affected
Once you reach £100000 of turnover you will start to lose personal tax allowance
C24 has the very easy potential to bankrupt many LL
Every LL should contribute to the JR.
There is no entitlement as one of the idiot posters suggested as a reason they weren't contributing.
This is a change in taxation policy that has been the same for about 220 years
ONLY mortgaged sole trader LL are to be affected by this iniquitous C24 tax legislation.
Other cost burdens on LL can be accepted , but NOT a fundamental change to tax policy.
You simply CANNOT plan for such a change.
Any business for hundreds of years has been able to offset finance costs against income before tax is assessed on the profit.
NO business should be charged tax on turnover
ONLY certain LL will be very soon in the whole of the UK!!!

Guest Avatar
Genesis 14th June, 2016 @ 08:50

1) Were you aware of the new tax legislation?

Yeah unfortunately I was aware of the new tax legislation. I don't like hearing about bad news, especially the kind that effects how little I will have left to spend on sipping Blue Hawaiians by the pool!

2) are you going to support/donate to the campaign?


3) how is the legislation going to affect you?

Wife is an accountant, so this affects me in two ways, no make that three ways. First I now have to have the most laborious talks about tax laws and money that makes a grown man want to wither and cry. Second this will push her into the 40% tax bracket and thus pay more, I believe thats how tax works. Thirdly she now has to work harder to make every penny count! Which in turn makes my life harder which feeds back to the first point. Its like a never ending cycle of misery!

4) have you made any preparations for the change, or are you going to? I know of a few landlords that are currently scaling back their portfolio, and taking advantage of the insanely high property prices!

Right thats it i'm scaling back my one property! No not really, I have a reasonable deposit in the house currently, whilst renovating the one i'm currently living in, looking to add value of around £40-50k minimum really. Im happy to play the slow long game with this, and the next property will only come once I have reached another high deposit. Till then I will just wait and see. I've just started so got a long way to go yet, and your right there will be many changes still to come.

Guest Avatar
aphrodisia 14th June, 2016 @ 08:53

Im surprised the majority of people haven't cottoned on to what the toerags are up to, I personally saw the writing on the wall when they introduced the council registration fee that came into effect last April. They are trying to drive small landlords out of the business and leave the industry free for their corporate cronies, that's what they are up to.
They will keep turning the screws on the small landlord until it will become just too much hassle for the "accidental" landlord to stay in business.

The Landlord Avatar
The Landlord 15th June, 2016 @ 11:38

"No respect for debt" Good way to put it.

Fortunately, it's not as easy to buy houses like tins of bean anymore. I suspect that those that did (when the opportunity was available), will be the one's worrying most now, because they have virtually zero equity. Many of them put down 0-10% deposits, continued to release equity, and carried on buying... incredibly risky when you have such little control over the market.

"3/4 outright is enough"... agreed!

I personally don't see it happening to limited companies. At least, not while the Tories are pulling the strings.

Thanks for the comment.

The Landlord Avatar
The Landlord 15th June, 2016 @ 11:44

Ha, definitely agree - landlords being easy targets because it was given that no one would have sympathy for us. We're on the same par as parking ticket inspectors and estate agents! How many people would actually care if estate agents were taxed more while property prices were so insanely high?

That's why I'm reluctant to be confident about the clause being overturned.

The Landlord Avatar
The Landlord 15th June, 2016 @ 11:47

Thanks Nicky, appreciate it.

My advice is, make a decision based on what will make your life most comfortable.

Good luck! :)

The Landlord Avatar
The Landlord 15th June, 2016 @ 11:59

Haha, I feel your frustration. I've never been a fan of Osbourne, he comes across as so utterly unlikable. Smug little tit.

The Government are owned by big corporate companies, that's why they keep getting richer, and everyone else is getting crushed! It's a joke.

Anyways, hope you manage to keep your portfolio alive and healthy!

The Landlord Avatar
The Landlord 15th June, 2016 @ 12:09

Yeah, I agree, I don't think many people realise that they will be affected. An even bigger problem is that most landlords don't even know about the legislation! Scary!

Definitely wait to see what your accountant says and then make a plan. Going limited is an option, but it comes with so much more work, which is something to bear in mind. If you haven't done so already, might be worth reading that article I linked to on the ThisIsMoney website.

Also, the tax rates on dividends recently changed, which makes it less appealing.

In my opinion, the best thing to do is just reduce the overall debt and look at better mortgage deals that offer better rates.

Thanks for the comment, and goodluck!

The Landlord Avatar
The Landlord 15th June, 2016 @ 12:13

If the C24 comes into play, I'm also confident many landlords will sink, especially those that bought so much, but own so little.

While I agree it's difficult to plan for a fundamental change to a tax policy, I think it is possible to adapt and make it work... or at least survive.

"NO business should be charged tax on turnover" - agreed. But the problem is, the Government clearly don't see BTL as a "business", which is baffling!

Thanks for the comment.

The Landlord Avatar
The Landlord 15th June, 2016 @ 12:15

Wife accountant, good equity, and playing the slow game... you'll be fine!

The Landlord Avatar
The Landlord 15th June, 2016 @ 12:18

See, I can't work out if they're doing this to appease the corporates or whether they're trying to push landlords out of business so there's a massive influx of properties back on the market, to help with the housing shortage/prices.

Whatever they're trying to achieve, it's the wrong way to go about it, that's for sure.

Guest Avatar
Dan 6th July, 2016 @ 17:50

I've been fortunate enough to get mortgage free by 35. I've remortgaged my property and taken another mortgage to buy a second property.

All in around £125k on 2 mortgages over 2 properties.

Rental income will be £450 which nearly covers both mortgages (rental expenses aside)

I'm estimating I'll have an income from rent and my self employed job of around £25k. After expenses I'm well off the 40% tax bracket.

So this tenant tax certainly seems aimed at people who are landlords exclusively as their job. Crazy for the government to single out 1 job role for extra tax.

Current plan is to massively over pay the mortgage on our new home. Get it mortgage free in 5 years. It's in need of renovation costing £102k plus fees and the bullshit 2nd home tax. All in it should cost £125k and be worth £140k so a tidy 15k in equity if I need to sell before the 5 years.

I'm technically a landlord I suppose but just an amateur one.

I've been looking at your blog when I can. Thanks for the info and help!

Guest Avatar
Paul 7th July, 2016 @ 06:55

What do you mean you are technically a LL!?
If you let out property you ARE a LL
No technicality about it.!
As such you are liable for many things
If you fail to comply you could end up in prison, so hardly technical!!
Have you used a spreadsheet to determine your actually position
Your mortgage interest will be counted as income
Are you aware of this!?
Many LL think they won't be pushed into HRT territory because they fail to understand how C24 works.
You need to ensure that your turnover less the personal tax allowance is below the HRT.
If not you will be a HR Taxpayer!
C24 affects every LL differently which is why you should complete the property118 spreadsheet
Then you will see your true actual position
Many LL are in for a shoch when they kise child tax credits etc because their mortgage devtvinterest has artificially boosted their gross income
Most sole trade LL haven't got a clue what is about to happen to them
That is their fsukt for failing to keep abreast if issues in the PRS
Wait to the tax man takes more if their income than they make in profit
But by then it will be too late
Many LL will he bankrupted by C24
Ll need to get with the programme and find out how C24 may affect then

Guest Avatar
Stephen 7th July, 2016 @ 08:07

I lament got this country. The dozy old English take all the s h I t that is thrown at them and complain in their pubs and clubs and do f u C k all. We need positive action like marching on Downing st. 30,000 LL out side that C u n t Osbourn's front door should focus his slimy public school boy deranged mind.

On the subject of Osbourne, where is he. During the vote the C u n t was nowhere to be found. I know where he was. He was in a darkened room with a box of tissues reading Femail Landlords Review try to think up more ways to smash private landlords into the ground to enable corporate landlords to pick up the residue.

Oh don't think he was knocking one out over a picture of Maggie Thature ( hence the tissues) no, the tissues were to dry his eyes from laughing his bollocks off when he devised another tax imposition on private landlords. Whilst the country was in chaos over Breixit he had used 4 boxes of tissues - the C u n t.

Anyway, how does one organise a protect march. Any ideas?


Osbourn's nemeses

Guest Avatar
Paul 9th July, 2016 @ 00:57

I believe EVERY LL agrees with your sentiments
However the idea that a march of LL will do anything apart from raise much hilarity amongst LL haters is delusional
A parade of LL will give a great opportunity to the nutty lefties to come out in force to assault such a march
Nobody wishes to be publicly associated with supporting LL irrespective of how much we are currently needed
Osborne will be gone very soon
Possibly off to the FO where he can't do anymore damage to the UK economy; but even better off to the backbenches!!
All we can do is lobby from behind the scenes and contribute to the JR fighting fund and the marketing fund.
We are probably the most needed yet despised profession in the UK and that is saying something when you consider our competition, politicians, estate agents, prostitutes etc!!!
The idea that the tenant public will in anyway support LL against C 24 is for Alice in Wonderland!
Even though it is in their best interests that they seek to overturn C 24.
There are vast numbers of LL that don't even know they are to be hit by this weird turnover tax.
So we have only ourselves to try and lobby against C24
But when you consider that only 1150 LL have pledged to contribute to the JR fighting fund that just shows you the level of LL apathy
There are reckoned to be about 450000 mortgaged sole trader LL who wil be affected by C 24
So why haven't all of them contributed to the C24 JR fighting fund!!?????

That should show you what we are up against!!

Guest Avatar
Jane 15th September, 2016 @ 22:35

The combat to the ridiculous tax changes is going to Limited company to purchase your buy-to-let. You'll figure out the buying through a company has more benefit than tax savings, especially for those who are looking at building a portfolio of property, investing as a group of friends or even transferring your property to your children.

Guest Avatar
Paul 16th September, 2016 @ 04:24

For any new LL it makes financial sense to do as you suggest.
That is start a company to invest with.
Any LL who is mortgaged as a sole trader faces financial destruction.
It makes NO economic sense to invest as an individual with the onset of S24.
Unfortunately for those LL that can;t escape to a company situation we are stuffed.
The only option we have is to increase rents to pay for the additional tax.
This will hit TENANTS hard.
Many LL I am aware of are selling up; deleveraging,reducing stock to unencumbered properties.
Mostly these properties are being sold to homeowners who are NOT currently tenants.
This means there will be vast numbers of homeless tenants who will not find a tenancy amongst the substantially reduced number of rental properties.
Never was there such a bonkers tax policy invented.
Perhaps the window tax is up there with it!!
Most sole trader LL could sel up and manage; but leaving hundreds of thousands of home less tenants.

Guest Avatar
Stephen 16th September, 2016 @ 09:09

Let's face it, the UK is f u c k e d in a plethora of ways and most importantly, financially. The government and the banks are deeply in love with each other - they have to be to prop each other up when their greed and incompetence f u c k themselves up.

So this legislation will not be withdrawn - they need to rape and steal every penny from anyone who has tried to make a go of making a living. Private landlords are going to be driven into the ground whilst the government and their lovers ( the banks) gorge on the fruits of our loss.

I have nine mortgages- all interest only so I am f u c k e d financially. I have done my sums and it does not work anymore. So that's it, I'm selling the lot. I agree with Paul above that there will be homeless people becaus no one will be able to afford the rents. I hope I see retribution heaped upon the UK government by the British public when there is a massive rental shortage.

Guest Avatar
Paul 16th September, 2016 @ 09:20

Most disappointing that your consider all your efforts have come to nought.
Would it be possible to hopefully use some of any sale profits you have to reduce mortgage debt and keep a couple of your properties.
I appreciate the CGT is a killer.
So the way to hang on for at least some hoped for future capital gain might be worth it.
Look up the rental properties as shared.
You hope they increase in value.
Hopefully you might be able to retain a few of your rental properties and reduce the debt.
Also try and remortgage on very long term tracker deals where you wouldn't need to ever remortgage.
This is because of the soon to be ever more PRA stringent requirents.
It would be a real Shane for you to be knocked out of the PRS completely when you have worked so hard to provide decent rental accommodation.
So think long and hard before you sell everything.
Try and hang to some of your properties
If you are married you could always officially separate and have 2 PPR
Just you wouldn't spend much time at tours and night visit the estranged wife quite often.
No S24 tax on a PPR with lodgers!!!

Guest Avatar
Shaun 16th September, 2016 @ 09:22

sadly you are spot on, the ultimate loser will be tenants but that will not affect Tory politicos as they don't vote Tory! So win-win they get to look like they are "doing something" about homelessness and housing while their property company shares soar on the back of it!

Guest Avatar
Phil 16th September, 2016 @ 18:05

It me the 'Idiot poster' who mentioned 'entitlement' back again.
For me this was a tax on debt not rent. Like the Landlord I used debt (still do) but always assumed it needed paying back - like other small business do.

So I am planning for removal of interest only mortgages, removal of tax relief completely (despite 220 years of precedent), national insurance on rent, tax relief removal on ltd companies invested is residential and Basel III to restrict new lending.
Like the Landlord I am planning for 'what if Sh1t happens'.
Leaves with with enough and if position worsens I sell more.

Guest Avatar
Benji 17th September, 2016 @ 16:26

For me this was a tax on debt not rent.

It is both (unless you introduce rent controls at the same time -which even Osborne wasn't bat shit crazy enough to do).

Or are you claiming affected landlords will just suck it up and won't increase rents and that unaffected landlords won't jump on the bandwagon?

The Landlord Avatar
The Landlord 10th October, 2016 @ 09:49

Update: Looks like the campaign to challenge the tax change was unsuccessful:

Now... if you haven't done so already... prepare! The tax changes seem imminent at this point.

Guest Avatar
Stella 10th October, 2016 @ 12:20

OK fellow landlords you know what to do. Spend, spend, spend on all your rental properties... give your tenants gold-plated windowsills and all if they ask for them ... stick it all down as repairs and maintenance and then the tax man won't get a penny! But in all fairnes he will get his fair share when you eventually sell and make a profit - so everybody wins. Tenant gets nice house to live in... landlord's rental property goes up in value... potential buyer gets a great house... tax man gets his fair share too. In theory it should work!

Guest Avatar
Paul 10th October, 2016 @ 13:35

Trouble is you can only replace gold window sills a few times before HMRC wise up!!
Just a shame improvement costs can't be offset
OK we would have no rental income as such though our properties would be veritable palaces.
Anything rather than give the income to Govt via S24!

Guest Avatar
andrewa 23rd November, 2016 @ 18:17

How does UK law handle it if the property is put in a blind trust / normal trust / beneficial trust? At least in terms of being able to claim mortgage interest as a cost of business. Anyone?

Guest Avatar
andrewa 3rd December, 2016 @ 12:02

Another point landlord, It was pointed out to me recently that in Scotland there is no structural difference between a cow barn and a hay barn. The difference is that one does not need planning permission for a hay barn but it is a requirement for a cow barn. Consequently cow barns have only been erected at government institutions since the necessity for planning permission came in and there are thousands of Scottish cows accommodated in hay barns. Would it not be possible to legally by contract with the tenant convert one type of rental accommodation (like BTL) into another (like a "self catering hotel suite") thus avoiding BTL tax (hotels AND b&b'S don’t Pay tax on their mortgage interest) this would also convert the non payment of rent into "bilking" which is a criminal offence prosecuted by the local constabulary as well as allowing for the criminal prosecution of those pulling a "Keith Moon" as vandalism.

Any thoughts from other followers of this blog?

Guest Avatar
Simon Pambin 3rd December, 2016 @ 15:39

Nice try, but they've got it covered: there's a pattern of occupation condition on Furnished Holiday Lets. In any one year, if the sum of all lets over 31 days adds up to more than 155 days, then it's not a FHL.

Guest Avatar
andrewa 9th December, 2016 @ 23:46

If not a FHL then perhaps some sort of residential hotel?

Guest Avatar
Phil 10th December, 2016 @ 08:59

Furnished Holiday Lets explosion around our town. But despite this being a tourist area and business conference centre the competition will hit profits.

For me, a nay sayer C24 was always simple....a debt reduction program and reasonably quickly.

The political strategy is simple, they want to keep rates down for business but don't want 2m LLs owning 10 houses each (that's around 90% of all houses!!) so they have stemmed the growth in BTL.

I definitely won't become limited...thats a whole different set of rules and objectives.
Think seriously about your timeline, your objectives and an exit strategy. I have 9 properties left so if I sell them as they become empty that could still take 20 years particularly when mitigating CGT. I will be almost 70 then....and the last thing I want at that age is property. Just cash and a simple set up.

No ideal how the plan works or what the end game was for those with massive interest only debts and 20 houses. Leave 20 boilers, 20 tenants, 20 leases and 20 mortgages to the kids....I bet they will be happy trying to unstitched that muddle.

The key here was by not being a limited company you could become relatively wealthy with a modest strategy.

Over the past 20 year, starting at 30 years old I have bought sold many houses a few years after renting them to lock in renovation gains and keep debt down. Who wants lots of houses and debt? Just a good relative income from 3/4 debt free houses surely.

C24 really has thrown my timeline but it it will encourage debt reduction and that's a good thing for me. When rates rise people will wonder why anyone would every have invested in property unless it gives a good 10% yield or you want it to live in. Still amazed me the prices some have paid for houses over the past few years to then let out. Bad research and bad contingency planning.

Guest Avatar
Simon Pambin 10th December, 2016 @ 13:36


Well, if you fancy making breakfast for your tenants every day, that might work (if you don't mind the extra costs of complying with the regulations for hoteliers). If you're not providing catering, then it's self-catering accommodation and you're right back at the FHL pattern of occupation test.

Guest Avatar
Mandy Thomson 22nd November, 2018 @ 08:59

In response to your circular email: I have been working as a landlord advisor with one of the large landlord associations for the past two years. I don't have figures but I speak to MANY landlords who tell me they'll be exiting soon, mainly because of s.24 but also because of their perception of increasingly complex and draconian legislation and the anti landlord climate (which IMHO in certain publications is nothing short of an out and out and hate campaign).

Guest Avatar
Paul Barrett 22nd November, 2018 @ 21:45

The logic of what you are being told is totally logical.
I doubt any business could survive if taxed on turnover and that was leveraged.
Taxing turnover is the quickest way to destroy a business and massively reduce the size of the economy with just the cash rich and large corporates running everything.
Anyone needing leverage to operate would be out of business if taxed on turnover.
The only problem is that if leverage isn't used to expand business then business declines and that becomes a massive economical problem.
It is simply a standard business proposition that business costs are offset against income to produce hopefully a taxable profit.
Well it seems only sole trader LL are to be hit with this restriction.
Ireland has seen the error of their ways and has now undone their less onerous version of S24 and is desperately trying to incentivise LL to return but this is not succeeding with LL understandably very wary.
It simply isn't possible to increase rents sufficiently for S24 costs and to have a RTI annually.
After all what is the point in having to quadrupke rents if you can and be no better off then 4 years previously
All you have become is a Govt tax collector.
So one can aed why many LL are not prepared to do this and are selling up.
That is why I am selling up making q0 tenants homeless in 3 years time.
None of my tenant want or can afford to buy my properties.
No LL will buy at full retail price.
So that will be 4 good rental properties removed from the market.
I will convert the sale proceeds into one residential property where I will take in lodgers.
I will be absent drom my PPR for many extensive periods.
The lodger income will be more than I currently make in peofit from 4 properties.
None of my current tenants would want to be lodgers.
Without S24 I have a viable business.
Yep I will be one of those LL you are talking about.
I don't need to be a LL but my tenants need me to be a LL.
Well I need to make PROFIT to do that........I ain't no charity.
S24 prevents that so no point continuing with conventional tenants.
Of course lodger income is very hard to detect and I suggest S24 is going to cause massive tax losses as LL desert the PRS.
Osborne has brought destruction of the LL taxbase and S24 won't make up for lost taxes.
I will certainly NOT be declaring any lodgdr income in excess of £7500 if I am fortunate enough to achieve such.
I have no issue with becoming a tax evader.
Govt simply isn't clever enough to detect lodgers if the LL knows what he is doing which I do!!

A real shame that S24 could very easily turn me into a tax evader which doesn't bother me at all.
With S24 the Govt has lost all moral authority to collect taxes from mortgaged sole trader LL.
Taxing LL profit is fine. Turnover tax is ridiculous.
If Govt wants to stop the PRS just impose 50% LTV requirements.
That would halt most new LL purchases.

No need then for S24.
But we are wgere we are and what you state is I believe going to continue even more resulting in very tough and far more expensive times for tenants.
Oh! Well!!!

















Your personal information will *never* be sold or shared to a 3rd party. By submitting your details, you agree to our Privacy Policy.

I want more info on...