Mortgage Interest not included in the online return 23-24

Having retired & not taking any pension, my income is now from property & savings interest only. I do not get any pesion yet. My property income does not use up all of my personal allowance. However, the 23-24 online tax form seems to ignore my property mortgage interest costs. Here's an example of what I had understood the calculation would be: Rent Received: £12000 Property Expenses: £1000 Property Profit: £112000 - £1000 = £11000 Mortgage Interest: £1500 Income not including savings interest: £9500 Residual Personal Allowance: £12570 - £9500 = £3070. Savings Interest: £10000 Savings above personal tax allowance: £10000 - £3070 = £6930 Savings interest tax free allowances £1000 + £5000 = £6000. Personal Savings Allowance + Starting Rate. Taxable Savings = £6930 - 6000 = £930 Total Tax Due = £186 This is not what the tax return says. It says I'd owe £486 which is exactly waht I get from the calculation above if I did not include the mortgage interest in Box 43.

Hi Dave,
The costs of getting a loan, or alternative finance to buy a residential property and any interest on such a loan or alternative finance payments can be used to calculate a reduction in your Income Tax.  If you have no income tax to pay then there is nothing to be reduced.
Thank you.

Thanks for the reply Admin 21 but I'm still confused. From the HMRC Help page on Tax on Savings it says: Your allowances for earning interest before you have to pay tax on it include: your Personal Allowance starting rate for savings Personal Savings Allowance Therefore, in my case, I should be able to use the residual personal allowance against the interest. Hence surely my total allowances would be: Personal Allowance + Starting Rate + Personal Savings Allowance = £18570.

Not HMRC...You have incorrectly deducted mortgage interest, your assessable income from property is £11000 not £9500, with any relief for the morgtage interest given as a basic rate credit up to the amount of the assessable tax on property income in isolation. As you dont have a property income liability there is nothing to set the tax credit against, therefore, the HMRC figure is £300 (£1500 x 20%) higher than your figure. To confirm, it is not piossible to treat the mortgage interest as a deduction, it must be given as a tax credit when the tax on property profit in isolation is considered.

Hi
Mortgage interest is not classed as personal interest as this is interest that you are charged and not interest you receive. It is not part of the personal savings allowance and as such is not part of the starting rate you refer to. You can only use the mortgage interest as a relief in respect of tax due on rental income if any tax is due on this particular source.