Starting from April 2020, buy-to-let landlords are required to pay taxes on their entire rental income. However, they are eligible for a tax credit equal to 20% of their mortgage interest payments.
For example, if your annual mortgage interest payments amount to £9,000, you can qualify for tax relief of £1,800 (20% of £9,000).
While this may seem beneficial, it is less favorable than the previous buy-to-let tax relief system, which began phasing out in 2017. Under the old rules, landlords in higher or additional tax brackets could claim relief at rates of 40% or 45%, as opposed to the current flat rate of 20%.