What is the mortgage interest tax credit for landlords?
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In short: Since 2020 landlords cannot deduct mortgage interest from rental income. Instead you receive a 20% tax credit on finance costs — worth less for higher-rate taxpayers who previously deducted interest at 40% or 45%.
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The credit is calculated on mortgage interest, not capital repayments. It reduces your tax bill but not your taxable rental profit directly.
Additional-rate taxpayers get only 20% relief on interest, not 45% — a significant change from pre-2020 rules.
See our rental income tax guide and buy-to-let yield calculator.
Primary source: gov.uk/guidance/changes-to-tax-relief-for-residential-landlords-how-its-worked-out
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