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Landlord glossaryTax

BTL (Buy-to-Let)

Buying a property to rent out, usually with a buy-to-let mortgage. Individual landlords cannot deduct mortgage interest from rental profit: under section 24 they receive a tax credit at the basic rate, 20% (22% from the 2027 to 2028 tax year). Buying an additional home in England or Northern Ireland also adds 5 percentage points of Stamp Duty Land Tax.

Reviewed by Erdem VolkanLast reviewed 16 September 2026How we check facts

Mortgage interest
Tax credit at 20% (22% from 2027 to 2028)
SDLT on additional homes
+5 percentage points since 31 October 2024
Property income tax rates
22%, 42% and 47% from 2027 to 2028
Making Tax Digital
Income over £50,000 now, over £30,000 from April 2027

Why it matters

What BTL (Buy-to-Let) means for a landlord

Buy-to-let is how most private landlords operate, but the numbers have changed a lot since 2015. Section 24 replaced mortgage interest relief with a basic-rate credit, the Stamp Duty surcharge on additional homes rose to 5 percentage points in October 2024, and from 2027 to 2028 property income has its own higher tax rates. Making Tax Digital for Income Tax also brings quarterly digital records for landlords above the income threshold. A yield calculation built a decade ago will overstate what a mortgaged property earns today, so re-run it with current tax and interest rates before buying or refinancing.

Worked example

How it plays out

Grace buys a £220,000 flat in Leeds to let while keeping her home. At the higher rates for additional homes her Stamp Duty is £12,900, against £1,900 for a buyer with no other property. The flat lets at £1,150 a month and her mortgage interest is £7,200 a year. As a higher-rate taxpayer she is taxed on the rent before interest, then gets a credit of 20% of the interest, £1,440, where relief at 40% would have been worth £2,880. Her spreadsheet had assumed the interest was deductible, which overstated her return by £1,440 a year.
An illustrative example. Names, places and figures are made up.

Common mistakes

Where landlords go wrong

  1. 01Treating mortgage interest as a deductible expense, when individual landlords get a basic-rate credit instead.
  2. 02Leaving the Stamp Duty surcharge out of the purchase budget.
  3. 03Judging a deal on gross yield, before voids, running costs, interest and tax.
  4. 04Letting a property on a residential mortgage without the lender’s consent.

What to do

A short checklist

  • Work out the net yield after costs, interest and tax at your own tax rate.
  • Add Stamp Duty at the higher rates to the purchase costs before you offer.
  • Check whether your income brings you into Making Tax Digital for Income Tax, and from when.
  • Keep income and costs per property from the first day.

Sources

Checked against these sources on 16 September 2026. A guide to the rules in England, not legal advice: for a dispute or a possession claim, speak to a solicitor.

All glossary termsRenters’ Rights Act 2025UK regulationsLandlord guides