Generally speaking, it is not possible to offset the interest on a loan if the loan monies were not used for the purpose of the letting business.
However, there is a concession in HMRC’s Business Income Manual in paragraph 45700. This gives landlords the opportunity to release equity from their portfolio and offset the interest regardless of what the money was used for.
The only restriction is that the amount of the equity release cannot exceed the original market value of the property when it was introduced to the lettings business.
Property can be a complicated area of tax, so feel free to seek some professional advice from your local TaxAssist Accountant.