Mortgage interest restriction is a UK tax rule that limits the amount of mortgage interest that can be claimed as a tax deduction by individuals who own rental properties. The mortgage interest restriction was introduced in 2017 as part of a wider reform of the UK tax system, and it applies to individuals who own residential properties that are rented out to tenants.

Under the mortgage interest restriction, the amount of mortgage interest that can be claimed as a tax deduction is limited to the basic rate of income tax (currently 20%). This means that higher and additional rate taxpayers (those with an income above £50,000 per year) will only be able to claim a tax deduction for a portion of their mortgage interest.

The mortgage interest restriction is intended to reduce the tax advantage of owning rental properties, and to encourage landlords to invest in properties that are more energy efficient and have lower carbon emissions. If you are a landlord and are concerned about the mortgage interest restriction and how it may affect you, it is a good idea to seek advice from a tax professional or from HM Revenue and Customs (HMRC).