Home / Glossary / Finance cost restriction
What is Finance cost restriction?
The finance cost restriction is HMRC's term for the Section 24 rules. Residential finance costs are not deducted from rental profit; you receive a tax reduction at the basic rate instead.
Why it matters to landlords
Finance costs include mortgage interest, interest on loans to buy furnishings, and fees for arranging or ending a mortgage. Capital repayments of the loan are never an expense.
The reduction is limited to the lowest of your finance costs, your property profit and your adjusted total income above the personal allowance. Any unused amount carries forward to later years.
Keep mortgage statements showing the interest charged for the year, as lenders' annual statements often split interest from capital.