The tax credit for mortgage interest rises from 20% to 24% on 6 April 2027. It rises because the tax rate on rental profit rises by the same four points, so most landlords with a mortgage are no better off.
| Mortgage interest relief | 2026/27 | 2027/28 |
|---|---|---|
| Rate of relief | 20% | 24% |
| Interest that counts | ||
| Tax credit |
Interest is not deducted from rental profit. You pay tax on the profit as if the mortgage did not exist, then take the credit off the bill. The table shows the tax left on each £100 of rent that goes straight out as interest.
| Your tax band | 2026/27 | 2027/28 |
|---|---|---|
| Basic rate | £20 − £20 = £0 | £24 − £24 = £0 |
| Higher rate | £40 − £20 = £20 | £44 − £24 = £20 |
| Additional rate | £45 − £20 = £25 | £49 − £24 = £25 |
The gap is the same in both years. The extra four points land on the profit you keep after interest, which is where your bill goes up.
Sources: GOV.UK tax relief for residential landlords, Budget 2026 rates and allowances.