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Could Section 24 be extended to Limited Companies? The fear landlords cannot shake

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Could Section 24 be extended to Limited Companies? The fear landlords cannot shake

Section 24 left a scar on the private rented sector that has never fully healed. It arrived fast. It arrived without consultation. It arrived in a way that many landlords still describe as a betrayal. The shock changed the psychology of investment for a generation.

The result is predictable. Every time a tax announcement surfaces, landlords ask the same question.

Will they come for limited companies next?

This fear is understandable. It is also one of the most persistent sources of anxiety in the landlord community. The potential consequences would be enormous. The question deserves a full and unfiltered examination rather than quick reassurance or empty speculation.

This article takes a forensic look at the issue. It addresses the political logic, the legislative barriers, the structural differences between individuals and companies, the role of Housing Associations, the involvement of pension funds, the importance of REITs and the reason Treasury would face a political and economic backlash far beyond anything seen in 2015.

The aim is not to dismiss landlord concerns. The aim is to evaluate the genuine risk with clarity rather than emotion.

The trauma of Section 24

Section 24 was a political intervention. It was not a rational tax reform. It was introduced during a period when the Government wanted to tilt the housing market towards first time buyers and away from private landlords. The measure was framed as a correction to an imbalance. It targeted one very specific group of taxpayers. It changed the economics of borrowing almost overnight.

It was politically cheap to introduce. It was technically easy to legislate. It required small amendments to income tax law. It did not require consultation with institutions, pension funds or regulated housing bodies. The public narrative at the time portrayed private landlords as part of the affordability problem. The measure was politically popular in mainstream discussion.

It is no surprise that landlords remain afraid the same might happen again.

Fear based on memory is powerful. Fear based on policy evidence needs closer examination.

Section 24 was aimed at individuals, not companies

Section 24 sits entirely within personal income tax. The targeting was deliberate. Individuals are taxed under ITTOIA 2005. Companies are taxed under the Corporation Tax Act 2009. These are separate systems with separate rules. Section 24 alters the way individual profits are calculated. It has no interaction with the corporate tax framework.

Companies were not given a privilege. They were simply governed by a different set of rules.

The elephant in the room

Many landlords argue that Section 24 itself created a structural inconsistency. They argue that if Government was willing to break long established norms once, it could break them again. They argue that fairness has never been the guiding principle. They argue that nothing is safe.

This argument must be taken seriously. Dismissing it would undermine the purpose of this article. The fear is logical on a psychological level. It is not supported on a structural level.

The correct way to address this is to examine the difference between political interventions and structural tax reform.

A political intervention can target individuals

A structural reform cannot target only individuals.

Section 24 targeted individuals because this was politically straightforward and technically simple. Income tax rules can be tightened or adjusted with very little risk to the wider economy.

Corporate tax structures cannot be changed in the same way. The corporation tax system supports:

• Housing Associations
• REITs
• pension funds
• institutional investors
• commercial landlords
• Build to Rent operators
• infrastructure providers
• major financial institutions

Targeting companies is an entirely different category of policy action.

Why Housing Associations block a corporate version of Section 24

Housing Associations rely heavily on finance cost deductibility. Their funding models, their viability assessments and their covenant compliance all incorporate interest deductibility as a core assumption.

If Government restricted finance cost deductions for companies, Housing Associations would face:

• higher reported taxable profits
• reduced surpluses
• worsened covenant positions
• higher financing costs
• increased rent pressure
• reduced development capacity
• impaired credit ratings

No Government seeking to increase housing supply can afford to destabilise Housing Associations. They deliver a large proportion of affordable housing. They partner with Government. They depend on the stability of corporate tax treatment.

Section 24 for companies would hit them directly.

Why REITs make the risk even smaller

Real Estate Investment Trusts are part of pension fund investment portfolios. They rely on predictable corporate tax treatment. Restricting their finance deductions would:

• damage pension fund performance
• destabilise listed property markets
• reduce investment in UK housing
• damage capital flows
• undermine Build to Rent pipelines
• weaken UK competitiveness

Treasury is acutely aware of the consequences of destabilising institutional investment.

A policy that hits both Housing Associations and REITs is not politically survivable.

Could Government exempt Housing Associations and REITs?

The simple answer is that this is theoretically possible but practically unworkable.

To target only “small landlord companies,” Government would need to:

• split the corporation tax system
• define a new class of “residential landlord companies”
• create exemptions for Housing Associations
• create exemptions for REITs
• create exemptions for commercial property
• draft anti-avoidance rules
• block group structuring loopholes
• manage legal challenges
• defend two parallel tax systems
• justify why certain corporate landlords keep deductibility while others lose it

Section 24 required a few tweaks to income tax law.
A corporate version would require the largest rewrite of property taxation in decades.

The complexity is enormous. The political risks are high. The economic risks are higher.

The behavioural reason the fear persists

Section 24 traumatised landlords. It arrived fast. It arrived without warning. It arrived with a narrative that framed landlords as part of the problem.

Many landlords now believe that any negative outcome is possible because one negative outcome already happened. The fear is understandable. It is not evidence-based.

To assess risk accurately, published policy signals must be examined rather than emotions.

What policy signals actually show

Property118 reviews:

• each annual Budget
• the Overview of Tax Legislation and Rates
• HMRC technical notes
• consultations
• policy costings
• impact assessments

Across all these documents, there has never been:

• a proposal to restrict finance deductibility for companies
• a consultation exploring the idea
• a technical note modelling the impact
• a Treasury briefing hinting at alignment with Section 24
• a single reference to a corporate version of the measure

The risk is not supported by evidence. It is supported only by memory.

Why the political context today is completely different from 2015

The UK now depends on:

• Build to Rent for housing delivery
• REITs for institutional investment
• Housing Associations for affordable homes
• pension funds for development capital
• inward investment to stabilise the market

Destabilising landlord companies would destabilise the entire housing system.

Individuals were politically easy to target in 2015. Companies are not.

What landlords should actually be preparing for

The real pressure points for strategy are:

• the 2027 income tax rise
• Section 24’s continuing impact
• refinancing and interest rate risk
• EPC reforms returning
• higher maintenance standards
• licensing expansion
• deleveraging strategy
• incorporation planning
• inheritance planning and Family Investment Companies

These factors will shape outcomes far more than speculative fears about an unsupported policy direction.

The final position

Section 24 for individuals was politically easy.

Section 24 for companies would be structurally impossible without rewriting the corporation tax system.

No Government has proposed it.
No consultation has explored it.
No technical note has hinted at it.
No housing strategy could survive it.
No institutional investor would tolerate it.

Section 24 for companies is not a live policy idea.
It is a fear created by memory, not supported by evidence.

Landlords should focus on the real strategic decisions that will shape their future, rather than the shadows cast by the past.

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Important notice – scope of planning support

Where our recommendations touch on areas requiring regulated input, we refer clients to appropriately authorised professionals for advice and execution.