Cómo calcular sus ganancias de alquiler según la Sección 24

Understanding how to calculate your rental profit correctly under Section 24 is one of the most important things you can do as a landlord. Get it wrong, and you risk either overpaying tax, which costs you money, or underpaying, which can lead to penalties and interest from HMRC. This page walks you through the calculation step by step, with worked examples, so you can see exactly how the rules work in practice. Why the Calculation Changed Prior to the introduction of Section 24, it was quite easy to calculate the rental profit. You calculated your rental income and all your allowable expenses (such as mortgage interest), and you paid taxes on the remainder. The amount of profit you found was a fair estimate of your true economic situation. Section 24, introduced by the Finance (No. 2) Act 2015 and fully in force since April 2020, broke that link. Individual landlords can no longer deduct mortgage interest or other finance costs from their rental income. Instead, those costs are dealt with separately, as a tax reduction applied after the tax on your rental profit has been calculated. The result is that your taxable rental profit is now higher than your actual cash profit, and the tax reduction you receive is worth less than the old deduction if you pay tax at more than the basic rate. The Step-by-Step Calculation The Section 24 calculation has four distinct stages, and it is important to work through each one in order. Step 1: Calculate Your Gross Rental Income Your starting point is the total rent you received during the tax year from all your residential letting properties. This includes any amounts received for services you provide alongside the accommodation, such as cleaning communal areas or gardening services, where those amounts are not separately charged as a service charge. It does not include security deposits that you hold on behalf of tenants and intend to return, but it does include any deposits you retain at the end of a tenancy. Step 2: Deduct Your Allowable Expenses (Excluding Finance Costs) You take any deductions you can on your property, except your mortgage interest or other financing costs, from your gross rental income. These are addressed at Step 4. The costs that can be deducted at this stage are letting agent fees and management charges, buildings and contents insurance premiums, repairs and maintenance costs (excluding capital expenditure on improvements), ground rent and service charges, council tax and utility bills paid (not the tenant), accountancy fees directly attributable to the letting business, and costs incurred for replacing domestic items under the replacement of domestic items relief. What you cannot deduct here, or anywhere else in the profit calculation, is your mortgage interest, loan arrangement fees, or any other finance costs. These are ring-fenced and dealt with at Step 4. Step 3: Arrive at Your Taxable Rental Profit After deducting your allowable expenses from your gross rental income, you arrive at your taxable rental profit. This is the figure that goes into your self-assessment return as your property income, and it is the figure on which your income tax is calculated. It is important to understand that this figure will be higher than your actual cash profit if you have a mortgage interest, because the interest has not been deducted. If your allowable expenses exceed your rental income, you have a property loss. Losses from a UK property business can generally be carried forward and set against future profits from the same business, but they cannot be set against other income. Step 4: Calculate and Apply the Finance Cost Tax Reduction Once you have calculated the tax on your rental profit (and all your other income), you apply the finance cost tax reduction. This is a reduction in your tax bill, not a reduction in your income, equal to 20% of the lower of three figures: Your finance costs for the tax year (mortgage interest, loan fees, and other qualifying finance costs) Your property business profits for the tax year (the figure from Step 3) Your adjusted total income for the tax year that exceeds your personal allowance The reason the reduction is capped at the lowest of these three figures is to prevent landlords from generating a tax reduction that exceeds the tax they actually owe on their property income. Where the full finance costs cannot be used in a given year, the unused amount is carried forward to the following tax year. Worked Example: Basic Rate Taxpayer Sarah has rental income of £14,000 and allowable expenses (excluding finance costs) of £2,500. Her mortgage interest for the year is £6,000. Her only other income is her salary of £28,000. She has no other income. Her taxable rental profit is £14,000 minus £2,500, which is £11,500. Her total income is £28,000 plus £11,500, giving £39,500. After deducting her personal allowance of £12,570, her taxable income is £26,930, which falls entirely within the basic rate band. Her income tax before the finance cost reduction is calculated on £26,930 at 20%, giving £5,386. She then applies the finance cost tax reduction. The lowest of her finance costs (£6,000), her property profits (£11,500), and her adjusted total income above the personal allowance (£26,930) is £6,000. Her tax reduction is 20% of £6,000, which is £1,200. Her final tax bill is £5,386 minus £1,200, giving £4,186. For a basic rate taxpayer, the Section 24 rules produce the same result as the old deduction system, because the 20% tax reduction is equivalent to a 20% deduction. The real impact of Section 24 is felt by higher and additional rate taxpayers. Worked Example: Higher Rate Taxpayer James has rental income of £20,000 and allowable expenses (excluding finance costs) of £3,000. His mortgage interest is £10,000. His salary is £55,000. He has no other income. His taxable rental profit is £20,000 minus £3,000, which is £17,000. His total income is £55,000 plus £17,000, giving £72,000. After deducting his personal allowance of £12,570, his taxable income is £59,430. The basic rate band covers income up to £50,270 (after the personal allowance), so £37,700 is taxed at 20% and £21,730 is taxed at 40%. His income tax before the finance cost reduction is (£37,700 × 20%) plus (£21,730 × 40%), which is £7,540 plus £8,692, giving £16,232. He then applies the finance cost tax reduction. The lowest of his finance costs (£10,000), his property profits (£17,000), and his adjusted total income above the personal allowance (£59,430) is £10,000. His tax reduction is 20% of £10,000, which is £2,000. His final tax bill is £16,232 minus £2,000, giving £14,232. Under the old rules, James would have deducted the £10,000 mortgage interest from his rental income, reducing his taxable rental profit to £7,000 and his total income to £62,000. His tax bill would have been lower by £2,000 — the difference between 40% relief (old rules) and 20% relief (Section 24). Worked Example: The Personal Allowance Trap Emma has a salary of £95,000 and rental income of £18,000. Her allowable expenses (excluding finance costs) are £1,500 and her mortgage interest is £12,000. Her taxable rental profit is £18,000 minus £1,500, giving £16,500. Her total income is £95,000 plus £16,500, giving £111,500. Because her adjusted net income exceeds £100,000, her personal allowance begins to taper. For every £2 of income above £100,000, she loses £1 of personal allowance. Her income above £100,000 is £11,500, so she loses £5,750 of her personal allowance. Her effective personal allowance is £12,570 minus £5,750, giving £6,820. This means £5,750 of income that would previously have been covered by her personal allowance is now taxed at 40%, costing her an additional £2,300 in tax, on top of the direct Section 24 impact. Her finance cost tax reduction is 20% of £12,000, which is £2,400. But the combined effect of Section 24 and the personal allowance taper means her total additional tax cost compared to the old rules is considerably higher. This is one of the most important and least understood consequences of Section 24. Carrying Forward Unused Finance Costs Where the 20% tax reduction cannot be fully utilised in a given year, because the property profits or adjusted total income are insufficient, the unused finance costs are not lost. They are carried forward to the following tax year and added to that year’s finance costs when calculating the tax reduction. This carry-forward must be actively tracked and included in your self-assessment return each year. HMRC will not apply it automatically. Common Mistakes to Avoid Several errors recur when landlords calculate their rental profits under Section 24. Including mortgage interest as a deductible expense rather than treating it as a finance cost is the most common mistake. Failing to carry forward unused finance costs from previous years means paying more tax than necessary. Using the total mortgage payment — capital and interest combined — rather than just the interest element is another frequent error, as is claiming relief on borrowing used for personal rather than property purposes. You should also remember that the finance cost tax reduction does not reduce your income but reduces your taxes. It cannot create a tax refund. Any unused reduction is carried forward. Self-Assessment tax return: Your rental profit (after deducting allowable expenses, but before any finance costs) will be reported in the UK property pages of your self-assessment tax return. The reduction is calculated automatically, and your finance costs will automatically be entered in the box provided for residential finance costs. Any finance costs carried forward must be recorded. Records should be maintained to justify any amounts if HMRC opens an enquiry. Summary It is important to know which expenses are allowable and which are finance costs, as these figures will impact your taxable rental income and result in an additional 20% tax deduction after your taxable income is calculated. The result for basic-rate taxpayers is much the same as under the previous rules. For higher and additional rate taxpayers, Section 24 is a real and permanent increase in tax, often due to the effect on the personal allowance taper and other thresholds. Making the calculation correct, tracking carry-forward amounts, and understanding the impact on adjusted net income are essential parts of your rental tax position. UK Landlord Tax offers expert tax guidance to landlords all over the UK. For assistance in evaluating your rental profits or understanding the impact of Section 24, please contact our team.

Cómo calcular sus ganancias de alquiler según la Sección 24

¿Por qué cambió el cálculo?

El cálculo paso a paso

Paso 1: Calcula tus ingresos brutos por alquiler

Paso 2: Deduce tus gastos admisibles (excluidos los gastos financieros)

Paso 3: Calcule su ganancia de alquiler imponible

Paso 4: Calcular y aplicar la deducción fiscal por gastos financieros

Ejemplo práctico: Contribuyente con tasa impositiva básica

Ejemplo práctico: Contribuyente con tipo impositivo más alto

Ejemplo práctico: La trampa de la deducción personal

Traslado de costes financieros no utilizados

Errores comunes que se deben evitar

Resumen

Categorías

Entradas de blog relacionadas

Los 10 gastos más deducibles para los propietarios (y los que no se pueden reclamar)

Impuesto sobre la renta del alquiler para los propietarios: cómo funciona en el Reino Unido

Cómo afecta la Sección 24 a su factura de impuestos como propietario

¿Tiene alguna pregunta para nuestros expertos en impuestos para propietarios?

Impuesto sobre propietarios en el Reino Unido