2024 Landlord Tax Changes: The 2024 tax position gave landlords more than one figure to consider.
The Capital Gains Tax allowance fell to £3,000 from 6 April 2024. However, the higher residential property CGT rate also fell from 28% to 24%.
Individual landlords continued receiving only basic-rate tax relief on residential mortgage finance costs. Therefore, advisers needed to assess tax, borrowing costs and ownership structure together.
Mortgage advice is not tax advice. Landlords should obtain advice from a qualified tax professional before changing their ownership structure.
What Changed for Landlords in 2024?
Tax rules can change the financial result of a property decision without changing the property itself.
For advisers, this creates an important distinction. A mortgage may meet a lender’s criteria while producing a different outcome after tax and associated costs.
The main 2024 considerations were:
- A lower Capital Gains Tax annual exempt amount
- A reduced higher CGT rate for residential property
- The continuing restriction on residential finance cost relief
- Higher refinancing costs for landlords leaving older fixed rates
- Greater interest in personal and limited company borrowing structures
These factors did not produce one universal answer. Their effect depended on the landlord’s income, gains, borrowing and long-term plans.
The Capital Gains Tax Allowance Fell
From 6 April 2024, the individual Capital Gains Tax annual exempt amount fell from £6,000 to £3,000.
This meant a smaller proportion of a taxable gain could be covered by the annual allowance. Landlords selling rental property could therefore become liable for CGT on a larger share of their gain.
However, CGT is calculated on the taxable gain rather than the property’s total sale price.
The calculation may consider:
- The original purchase cost
- Certain buying and selling costs
- Qualifying capital improvement expenditure
- Available reliefs
- Capital losses
- The annual exempt amount
Landlords considering a sale needed tax advice based on their complete circumstances.
The Government’s confirmed Capital Gains Tax annual exempt amount provides the technical basis for the 2024 allowance.
The Higher Residential Property CGT Rate Fell
The reduced allowance was not the only 2024 change.
From 6 April 2024, the higher CGT rate applying to qualifying residential property gains fell from 28% to 24%. The lower residential property rate remained 18%.
Therefore, the outcome depended on both the taxable gain and the rate applying to it.
A landlord could have a smaller tax-free allowance but potentially face a lower higher-rate charge. This is why the 2024 position should not be described simply as one large tax rise.
Section 24 Continued to Affect Individual Landlords
Individual landlords could not deduct residential mortgage interest fully from rental income when calculating taxable property profits.
Instead, qualifying residential finance costs generally produced a basic-rate tax reduction.
This could affect higher-rate and additional-rate taxpayers more significantly. Their taxable property profit could be higher than the cash surplus produced by the property.
For example, an adviser might examine:
- Gross annual rent
- Allowable property expenses
- Mortgage interest
- Current mortgage rate
- Expected refinancing rate
- Rental coverage requirements
- Personal or company ownership
- Available cash reserves
A mortgage review cannot determine the landlord’s tax position. However, it can identify whether borrowing costs are placing pressure on cash flow.
Why Mortgage Costs Still Mattered
Many landlords reaching the end of fixed-rate mortgages during 2024 faced higher replacement rates than those available several years earlier.
The practical issue was not tax alone. It was the combined effect of tax treatment, mortgage payments and operating costs.
Advisers could help clients review:
- The fixed-rate expiry date
- Early repayment charges
- Current loan-to-value
- Rental income and lender stress testing
- Product fees and valuation costs
- Interest-only and repayment options
- Portfolio exposure
- Personal or limited company lender criteria
Our buy-to-let mortgage guide explains how lenders assess rental income, deposits, property types and landlord experience.
Personal Ownership Versus a Limited Company
Limited company buy-to-let attracted greater attention during 2024. Companies can generally treat qualifying mortgage interest as a business expense when calculating taxable profits.
However, company ownership was not automatically better.
A comparison could include:
- Corporation Tax
- Dividend or salary extraction
- Mortgage pricing
- Lender fees
- Accountancy costs
- Stamp Duty Land Tax
- Capital Gains Tax
- Legal ownership
- Succession plans
- Future property purchases
Moving an existing property into a company may be treated as a sale and purchase. This can create tax, legal and refinancing costs.
Advisers should avoid recommending a company structure for tax reasons. Instead, they can explain the available mortgage routes after the client receives tax and legal advice.
Read our limited company buy-to-let guide for the lending considerations behind this structure.
A Practical 2024 Review for Advisers
A structured landlord review could begin with five questions:
- When does the current mortgage deal end?
- What happens to cash flow at a higher interest rate?
- Does the property still satisfy lender rental calculations?
- Is the landlord planning to retain, sell or expand?
- Has the client obtained qualified tax advice?
The purpose is not to predict every future tax change. It is to understand whether the current financial structure still supports the landlord’s objective.
Advisers requiring broader buy-to-let lender access can review the Connect network panel of mortgage lenders. Landlords seeking regulated mortgage advice can also use Connect Experts to find a buy-to-let mortgage adviser.
Frequently Asked Questions
Did landlord tax increase in April 2024?
The CGT annual exempt amount fell to £3,000. However, the higher residential property CGT rate fell from 28% to 24%. The effect depended on the landlord’s taxable gain and circumstances.
Did Section 24 end in 2024?
No. The residential finance cost restriction continued to apply to individual landlords.
Was limited company buy-to-let more tax-efficient?
It could be suitable for some landlords, but not everyone. Mortgage rates, company taxes, extraction costs and transfer taxes all required consideration.
Could mortgage advice replace tax advice?
No. Mortgage advisers assess borrowing options and lender criteria. A qualified tax professional should assess the client’s tax position.
Important Information
This article reflects the tax and mortgage considerations relevant during 2024. It is provided for intermediary information and does not constitute tax, legal or investment advice.
Tax treatment depends on individual circumstances and may change. Clients should seek advice from suitably qualified tax and legal professionals before making ownership or disposal decisions.