Section 24 and BTL Tax
UK landlords cannot deduct mortgage interest in full. Model the 20% credit and SPV alternative.
Since 2017, individual UK landlords cannot deduct finance costs in full against rental profit. Section 24 replaced the deduction with a 20% tax credit.
The restriction
Interest is added back. You are taxed on profit before interest, then given a basic-rate credit on eligible finance costs.
Who it hurts
Higher and additional-rate landlords on interest-only or high-LTV stock. Basic-rate landlords are largely cash-neutral.
Company alternative
A limited company still deducts interest before corporation tax. You then pay CT plus extraction tax. Model both — SPVs are not free.
SDLT
Additional dwellings carry a surcharge. First-time-buyer relief does not apply to BTL. Cash-to-complete is deposit + SDLT + fees.
Gross yield is a listing number. Cash-on-cash after Section 24, voids and a +2% rate shock is the underwrite. Use the BTL engine’s stress table.