Updated October 2026 · Fraser Bond
Tax · Landlords
Mortgage interest on rentals
Section 2420% credit
Companiesfull deduction
Finance costswhat counts
Calculatorcompare
In short: Individual landlords can't deduct mortgage interest from rental income for income tax. Instead they get a tax credit worth 20% of their finance costs, which particularly affects higher and additional-rate taxpayers. Limited companies deduct interest in full as a business expense, paying corporation tax on profits, though extracting money as dividends is taxed again. Finance costs include interest, arrangement fees and interest on loans for furnishings, but not capital repayments.
Individual vs company (simplified)
Tax as individual–
Corporation tax (before dividends)–
Ignores dividend tax, marginal relief and other factors. Take advice.
Frequently asked questions
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Can landlords deduct mortgage interest?
Individuals get a 20% credit instead.
Should I use a company?
It depends; consider transfer costs and dividends.
