Section 24 — the mortgage interest relief restriction — has been fully phased in since April 2020 and continues to reshape the economics of buy-to-let property in Scotland. Combined with Scotland's own income tax rates and the Additional Dwelling Supplement on LBTT, the tax landscape for Scottish landlords is now considerably more complex — and significantly more costly — than it was a decade ago.
What Section 24 Actually Changed
Before Section 24, landlords could deduct mortgage interest in full from rental income before calculating their tax liability. So if you received £18,000 in rent and paid £10,000 in mortgage interest, you were taxed on just £8,000. From April 2020, that deduction was abolished and replaced with a basic rate tax credit worth only 20% of the interest paid.
The practical impact: A landlord paying £10,000/year in mortgage interest no longer reduces their taxable rental income by £10,000. Instead, they get a £2,000 credit against their tax bill. For higher-rate taxpayers, this alone can increase the annual tax bill by several thousand pounds on a single property.
Why Scotland's Landlords Are Hit Harder
Most Section 24 explainers are written with England's tax bands in mind. In Scotland, the picture is worse. Scotland's higher rate of 42% applies from just £43,663 of income — compared to £50,271 in England. Add rental income on top of employment or self-employment income and many Scottish landlords find themselves in the higher rate band sooner than they expect. The tax credit relief remains at only 20%, regardless of what rate you pay — meaning Scottish higher-rate landlords lose more than their English equivalents on identical mortgage interest payments.
LBTT and the Additional Dwelling Supplement
Scotland replaced England's Stamp Duty with Land and Buildings Transaction Tax (LBTT). Residential purchases attract an Additional Dwelling Supplement (ADS) — currently 6% on top of standard LBTT rates — on any property that isn't your primary residence. For a Glasgow landlord purchasing a buy-to-let at £200,000, the ADS alone adds £12,000 to the acquisition cost.
What Can Scottish Landlords Do?
- Review your structure. Some landlords with larger portfolios have explored incorporating into a limited company, which can claim full mortgage interest as a business expense. This isn't right for everyone — the costs and stamp duty implications need careful analysis.
- Claim every allowable expense. Letting agent fees, insurance, repairs and maintenance, accountancy fees, and travel to inspect properties are all deductible. Many landlords underclaim.
- Prepare for MTD. From April 2026, landlords with rental income over £50,000 must file quarterly under Making Tax Digital. Digital record-keeping now will make this transition easier.
Our property accounting service helps Scottish landlords in Glasgow, Edinburgh and across the country structure their affairs efficiently within current rules. We work through each client's position individually — there's no one-size-fits-all answer here.
Talk to a Scottish Landlord Accountant
We help landlords across Glasgow, Edinburgh and Scotland with self assessment, LBTT guidance and rental income tax. Free consultation.
Email: info@foreveraccounts.com · Response within 2 hours