Finance Costs Worksheet for Landlords: Track Mortgage Interest for Section 24

A good landlord mortgage interest worksheet is the difference between confidently claiming the right Section 24 tax credit and either overpaying HMRC or triggering questions you cannot answer. Since the Section 24 restriction finished phasing in (2020/21 onwards), you can no longer deduct mortgage interest from your rental profit. Instead you record those finance costs separately and claim a basic-rate (20%) tax reduction on them. That only works if you have tracked every penny of qualifying interest and fees across the whole tax year, which is exactly what a structured worksheet is for.

This guide explains what belongs on a landlord mortgage interest worksheet, how the figures flow onto your Self Assessment property pages, the carry-forward trap that catches even experienced landlords, and the common mistakes that quietly cost you money. It is written for individual (personal-name) landlords in England, because that is who Section 24 bites; if you let through a company, the mechanics are different and we flag where.

Why you need a landlord mortgage interest worksheet

Under the old rules, anyone who let property before 2017 will remember them, mortgage interest reduced your taxable rental profit directly, pound for pound. A higher-rate taxpayer effectively got 40% relief on every pound of interest. Under Section 24, finance costs are no longer an allowable expense against rental income at all. Instead the relief works in two stages:

1. You calculate rental profit as if finance costs did not exist.
2. You then claim a separate tax reduction equal to 20% of your allowable finance costs, capped at the lower of (a) your finance costs, (b) your property profits, or (c) your total income above the personal allowance.

That two-step structure is precisely why a dedicated worksheet matters. The interest figure does not sit in your expenses column, it lives in a separate box on the return (“Residential property finance costs” on the SA105 UK property pages). Mix it up with general expenses and you will either double-count it or lose the credit entirely. HMRC’s own guidance on this sits in the Property Income Manual and the SA105 notes on GOV.UK.

A worksheet also gives you the audit trail you need if HMRC asks how you arrived at the number. Lenders issue an annual interest certificate; your worksheet is where you reconcile those certificates against what you actually claim. Without that reconciliation, a single transposed digit or a forgotten product fee can sit unnoticed on years of returns.

Who Section 24 affects most

Section 24 does not change anyone’s headline tax rate, but it changes how much income is exposed to tax. Because the relief is now a flat 20% credit rather than a deduction at your marginal rate, the people who lose out are:

• Higher-rate (40%) and additional-rate (45%) taxpayers, who used to get relief at their full rate and now get only 20%.
• Landlords pushed into a higher band by the change. Because profit is now calculated before interest, your taxable income can be artificially inflated, enough to tip you over the £50,270 higher-rate threshold, claw back child benefit, or erode the personal allowance above £100,000, even when your real-world cash profit is modest.

A basic-rate taxpayer whose income stays comfortably within the basic band is broadly neutral under Section 24, but the worksheet still matters, because you still have to report the finance cost in the right box to get the credit at all.

What counts as a finance cost

The Section 24 restriction is broader than just monthly mortgage interest. Allowable finance costs you should be tracking include:

• Mortgage and loan interest on borrowing used to buy or improve the let property.
• Interest on loans taken to fund the rental business (for example, a loan to cover a deposit or refurbishment).
• Mortgage arrangement and product fees, broker fees, and other incidental costs of obtaining or renewing finance.
• Interest on overdrafts used for the rental business.
• Early repayment charges where they relate to refinancing the let property.

What does not go on a finance-costs worksheet:

• Capital repayments of the mortgage (only the interest element qualifies, never the capital).
• Repairs, insurance, letting fees, ground rent, service charges and management costs, these are ordinary allowable expenses and go in the normal expenses boxes, not the finance-costs box.
• Interest on borrowing for non-rental purposes, even if secured on the property.

Tip: On a repayment mortgage, only the interest portion of each payment qualifies. Use your lender’s annual interest statement, not your bank statement totals, to get the interest figure right.

The “incidental costs of finance” point

Many landlords track the monthly interest religiously but forget the one-off costs of obtaining the finance. Arrangement fees, product (booking) fees, valuation fees charged by the lender, and broker fees are all incidental costs of raising a loan for the rental business and qualify for the same 20% treatment. They are easy to miss precisely because they happen once, at purchase or remortgage, and never appear on a routine statement again. A worksheet with a dedicated column for fees forces you to capture them in the year they are incurred.

What to put on the worksheet (column by column)

A robust landlord mortgage interest worksheet should have one row per property (or per loan, if a property has more than one) and capture the following for the tax year (6 April to 5 April):

Keep the supporting documents, annual interest certificates, broker invoices, and mortgage offers, filed alongside the worksheet. HMRC requires landlords to keep records for at least five years after the 31 January submission deadline of the relevant tax year. For 2025/26, filed by 31 January 2027, that means keeping records until at least 31 January 2032.

One worksheet or one per property?

If you own a single let, one row is enough. If you own a portfolio, run one row per loan and total them at the bottom, because:

• Different properties may be on different lenders with different statement dates.
• The Section 24 caps apply to your aggregate finance costs and aggregate property profits, not property by property, so you need a clean grand total to feed onto the return.
• If you sell a property mid-year, you want its interest cleanly isolated for the apportioned period.

If you are just starting out, build the worksheet into your routine from day one, our first-time landlord checklist treats record-keeping as a launch task, not an afterthought.

A worked example

Say you have one buy-to-let in England with these figures for 2025/26:

• Rental income: £14,400
• Allowable expenses (repairs, insurance, agent fees): £3,200
• Mortgage interest: £6,000
• Mortgage product fee (this year): £500
• Your employment income (separate): £45,000

Your worksheet flow:

1. Taxable rental profit = £14,400 − £3,200 = £11,200 (note: finance costs are not deducted here).
2. Total finance costs = £6,000 + £500 = £6,500.
3. Tax reduction = 20% × £6,500 = £1,300, subtracted from your final tax bill.

The £6,500 goes in the residential finance-costs box; the £1,300 is the credit applied at the end of the calculation. So this landlord pays income tax on £11,200 of property profit (added to their £45,000 salary, some of which now falls into the higher-rate band), then has £1,300 knocked off the resulting bill.

Notice the sting: the £11,200 stacked on top of £45,000 takes total income to £56,200, pushing roughly £5,930 of it into the 40% band. Under the old rules the £6,500 of interest would have reduced taxable profit to £4,700 and kept the landlord comfortably basic-rate. Under Section 24 the profit is reported gross of interest, the higher band is triggered, and only a flat 20% credit comes back. That gap is the Section 24 effect in a single example, and it is exactly why higher-earning landlords feel it most.

When finance costs exceed profit

If your finance costs exceed your property profit in a year, the relief is restricted to 20% of the profit figure, and the unused finance costs are carried forward to set against future years. For example, if you had £6,500 of finance costs but only £4,000 of property profit, the credit this year is capped at 20% × £4,000 = £800, and the remaining £2,500 of finance costs carries forward. A running worksheet with a “carry-forward brought in” line is the only reliable way to keep that figure alive year on year rather than losing it.

Common mistakes the worksheet helps you avoid

• Claiming capital repayments. Only interest qualifies. A worksheet that pulls interest from the lender’s certificate stops you accidentally including capital.
• Putting interest in the expenses box. This is the single biggest Section 24 error. Finance costs have their own box; ordinary expenses have theirs. Get it wrong and you either double-relieve or get no relief.
• Forgetting fees. Arrangement and broker fees are easy to miss because they are one-off, log them the month they are incurred.
• Losing the carry-forward. If finance costs were restricted by the profit or income cap in a prior year, that unused amount carries forward. A running worksheet keeps the carry-forward visible; a from-scratch spreadsheet every April quietly throws it away.
• Using the wrong dates. The tax year runs 6 April to 5 April, but your lender’s statement may run to a different anniversary. Apportion if necessary so the interest you claim falls in the right tax year.
• Higher-rate confusion. The credit is fixed at 20% regardless of your tax band, which is why higher-rate landlords feel Section 24 hardest. If the maths is changing your effective tax position significantly, it may be worth reviewing whether a limited company structure suits your circumstances, a question for an accountant, not a template.
• Jointly-owned property errors. If you own with a spouse or partner, the interest is split in the same proportion as the income (50/50 by default for spouses, or per your declared beneficial-ownership split). Each owner needs their own worksheet line for their share.

How the figures flow onto your tax return

The worksheet is the working paper; the return is where the numbers land. On the SA105 UK property pages:

1. Rental income goes in the income section.
2. Allowable expenses (repairs, insurance, agent fees, etc.) go in the expenses boxes, not interest.
3. Residential property finance costs for the year go in the dedicated finance-costs box. This is the total finance cost, not the 20% figure.
4. HMRC’s calculation (or your software) applies the 20% credit automatically, subject to the caps, and shows the reduction in your tax computation.

If you file online, the software does the capping arithmetic for you, but only if you have entered the right total in the right box. The worksheet’s job is to make sure that total is complete and defensible. Keep a copy of the worksheet with each year’s return so that if HMRC opens an enquiry, you can show your working in minutes rather than reconstructing years of statements under pressure.

How this fits your wider compliance picture

Finance-cost tracking is part of good landlord record-keeping generally. The Renters’ Rights Act 2025 (in force from 1 May 2026) did not change the tax treatment of mortgage interest, Section 24 is income-tax law, not housing law, but the move to periodic assured tenancies and tighter compliance means landlords are under more pressure than ever to keep clean, dated records across rent, deposits and finances. A finance-costs worksheet sits neatly alongside your rent ledger and expenses log as part of that evidence base.

Good records also protect you on the enforcement side. Sloppy paperwork is a recurring theme in the growing list of landlord fines in England, and while tax errors are an HMRC matter rather than a council one, the discipline that keeps your Section 24 figures clean is the same discipline that keeps your wider compliance checklist green.

If you let through a limited company, note the mechanics differ: companies deduct interest as a business expense and are not subject to the Section 24 restriction, so the worksheet structure changes, interest goes back into the expenses calculation rather than into a separate credit box. Always confirm your specific position with a qualified accountant.

Frequently asked questions

Do I still need a finance-costs worksheet if I am a basic-rate taxpayer?

Yes. Even if Section 24 leaves your overall tax broadly neutral, you still have to report the finance cost in the correct box to receive the 20% credit at all. And because profit is now calculated before interest, basic-rate landlords can be tipped into the higher band more easily than they expect, the worksheet is what lets you see that coming.

Where exactly does the interest figure go on my tax return?

On the SA105 UK property pages, residential mortgage interest and other qualifying finance costs go in the dedicated “Residential property finance costs” box, never in the general expenses section. You enter the full finance-cost total; HMRC’s calculation then applies the 20% credit and the caps automatically.

Can I include the capital part of my mortgage payment?

No. Only the interest element of a mortgage payment qualifies as a finance cost. Capital repayments are never deductible and never attract the credit. Always take the interest figure from your lender’s annual interest certificate rather than totalling bank-statement payments, which include capital.

What happens to finance costs I cannot use this year?

If your finance costs are restricted by the profit or income cap, the unused portion is carried forward to set against finance costs relief in a later year. There is no time limit on the carry-forward while you continue to let property, but you must track it on a running worksheet, start a fresh spreadsheet each April and you risk losing the carry-forward entirely.

How long do I have to keep the supporting documents?

Keep interest certificates, broker invoices and mortgage offers for at least five years after the 31 January filing deadline for the relevant tax year. For the 2025/26 return filed by 31 January 2027, that means retaining records until at least 31 January 2032.

Does Section 24 apply if I own the property through a company?

No. Limited companies are outside the Section 24 restriction and deduct mortgage interest as an ordinary business expense, so the worksheet structure changes. Whether incorporating is worthwhile depends on your wider tax position, read our guide on owning rental property in a limited company and speak to an accountant before restructuring.

Coming soon

Tenancy Pilot is launching soon with a built-in finance-cost log that records mortgage interest, arrangement fees and broker costs per property, calculates your Section 24 tax credit automatically, applies the profit and income caps, and carries unused amounts forward year on year, feeding straight into 20+ landlord tax and finance reports. No more rebuilding a spreadsheet every April or hunting for last year’s carry-forward figure. Join the waitlist to be first to use the in-app version of the landlord mortgage interest worksheet when we go live.

This guide is general information for England landlords, not legal or tax advice. Tax treatment depends on your individual circumstances and can change. Check the current rules on GOV.UK and legislation.gov.uk, and consult a qualified accountant or solicitor before acting.

This is general information, not legal advice. Rules change and your circumstances may differ, always check GOV.UK and legislation.gov.uk, and consult a solicitor before acting.