Accounting software for UK property landlords
SA105 property income pages, Section 24 mortgage-interest restriction, post-April-2025 Furnished Holiday Lettings reforms, Rent-a-Room £7,500, and HMRC MTD for ITSA — for buy-to-let, FHL, and HMO landlords.
UK property landlords navigate a tax regime that has tightened dramatically over the past decade. Section 24 of the Finance (No. 2) Act 2015 has fully restricted mortgage interest relief to a basic-rate (20%) tax credit since April 2020 — higher-rate landlords no longer deduct interest as an expense. The Furnished Holiday Lettings (FHL) special regime is being abolished from April 2025 — bringing short-term holiday lets under the same restricted regime as long-term lets. The Rent-a-Room scheme gives £7,500 of tax-free rental income from a furnished room in the landlord's main residence. And MTD for ITSA from April 2026 brings quarterly digital reporting for landlords above £50K.
UK property landlords at a glance
| Field | Value |
|---|---|
| Authority | HMRC (Self-Assessment SA105) |
| Section 24 status | Mortgage interest fully restricted to 20% credit since April 2020 |
| FHL regime | Abolished from April 2025 Existing FHLs revert to standard property treatment. |
| Rent-a-Room scheme | £7,500 tax-free Furnished room in landlord's main residence only. |
| Property allowance | £1,000 tax-free Mutually exclusive with full-cost deduction. |
| MTD for ITSA | Mandatory April 2026 if property income > £50K Threshold drops to £30K April 2027. |
Rates and thresholds verified against HMRC and gov.uk as at 2026-05-18. Re-verify after each Autumn Budget and Spring Statement.
Section 24 — the mortgage interest restriction that reshaped UK BTL
Section 24 of the Finance (No. 2) Act 2015 phased out mortgage interest as a deductible rental expense between April 2017 and April 2020. From April 2020 onwards, mortgage interest is no longer deducted from rental income at all — instead, the borrower receives a 20% basic-rate tax credit against their tax bill on the interest amount. For higher-rate (40%) and additional-rate (45%) landlords, this is a real cost increase: previously they got 40–45% relief on every pound of interest; now they get 20%.
The change can push borderline landlords from basic to higher rate because rental income is reported gross of interest — pushing total income above the £50,270 higher-rate threshold even when the underlying economic position is unchanged. HelloBooks calculates the Section 24 tax credit as a separate line, builds the SA105 with interest properly disclosed (Box 26) and the credit on the tax calculation, and runs a scenario analysis (limited company vs personal name) so portfolio landlords can model the structure decision.
Furnished Holiday Lettings — special regime abolished from April 2025
Until April 2025, the FHL regime treats short-term holiday lets (140+ days available, 105+ days actually let, 30-night maximum stay) as a trade for tax purposes — allowing full mortgage interest deduction, capital allowances on furniture, business-asset-disposal relief, and pension contributions from rental income. From 6 April 2025, the FHL regime is abolished; FHL properties revert to the standard rental regime under Section 24.
Transitional rules apply: capital allowances on furniture purchased pre-April 2025 retain writing-down allowances; losses brought forward remain available within the same business but cannot be offset against general property losses; capital gains tax reliefs (business-asset-disposal relief) cease for FHL disposals after April 2025 unless the property is held in a trading structure. HelloBooks runs a pre-/post-April-2025 comparison on FHL portfolios so the structure decision (limited company, incorporation, sale) can be made on actual data.
Rent-a-Room, property allowance, and MTD for ITSA
The Rent-a-Room scheme exempts up to £7,500 of rental income from a furnished room in the landlord's main residence (£3,750 if shared with another occupant such as a partner). It applies to lodgers and short-term lets in your own home only — not to whole-property lets or properties you don't live in. The £1,000 property allowance covers other property income up to £1,000 tax-free; above that, full self-assessment with actual expenses is required. The two allowances are mutually exclusive on the same property.
MTD for ITSA from 6 April 2026 applies to landlords with combined self-employment + property income above £50,000 — mandating digital records and quarterly updates to HMRC plus an end-of-period statement and the final SA100. The £30,000 threshold follows 6 April 2027. HelloBooks is MTD-ready and supports both the quarterly updates and the full SA100 + SA105 generation.
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