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UK Rental Income Tax Calculator

Calculate tax on your rental property income for the 2026/27 or 2025/26 tax year. See your income tax, mortgage interest relief at 20%, and after-tax cash flow.

01 —INPUTS
Calculate Your Rental Income Tax

Insurance, repairs, agent fees, etc.

Interest only — not capital repayments

Employment, self-employment, or pension income

The property allowance replaces your actual expenses — you cannot claim both. Claiming it also rules out the 20% mortgage interest tax credit for the year, so it usually only helps landlords with expenses under £1,000 and no mortgage.

02 —RESULTS

Tax on Rental Income

£2,986.00

Effective rate: 17.46%

After-Tax Cash Flow

£7,114.00

Annual net cash

Net Rental Income

£15,100

Before mortgage interest credit

03 —BREAKDOWN
Rental Income Tax Breakdown
Effective Income£17,100
Net Rental Income£15,100
Income Tax£3,986.00
Mortgage Relief (20%)−£1,000.00
Total Tax£2,986.00
After-Tax Cash Flow£7,114.00
2026/27 vs 2027/28: separate property income rates

Extra tax from April 2027

+£202.00

A year, on these figures, once 2027/28 rates apply

2026/272027/28
Rates on rental profit20% / 40% / 45%22% / 42% / 47%
Mortgage interest credit£1,000.00 at 20%£1,100.00 at 22%
Tax on rental income£2,986.00£3,188.00

From 6 April 2027 rental profit is taxed as its own slice, after your other income, and your personal allowance is used against your other income first. Figures use the England and Northern Ireland rates in Finance Act 2026. Welsh taxpayers pay them only if the Senedd sets its 2027/28 property rates to match, which it has not done yet.

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How rental profit is taxed (2026/27)

Rental profit isn't taxed in isolation — it sits on top of your employment, self-employment or pension income and is taxed at whatever band it falls into. England, Wales and Northern Ireland use these bands (Scotland has its own).

Band Taxable income Rate on rental profit
Personal Allowance Up to £12,570 0%
Basic rate £12,571 – £50,270 20%
Higher rate £50,271 – £125,140 40%
Additional rate Over £125,140 45%

Mortgage interest is then relieved separately as a 20% tax credit (Section 24), not as a deduction. The credit is 20% of the lowest of your finance costs, your property business profits, and your income above the personal allowance — it can never take your bill below nil, and anything left unrelieved is carried forward to set against future years.

Worked examples (2026/27)

Basic-rate landlord

£12,000 rent, £2,000 expenses, £4,000 mortgage interest, £30,000 other income. Net rental profit £10,000; income tax on it £2,000, less the 20% interest credit £800 = £1,200 tax. After-tax cash flow £4,800.

Higher-rate landlord (Section 24 bite)

£18,000 rent, £3,000 expenses, £6,000 mortgage interest, £55,000 other income. Profit is taxed at 40% (£6,000) but interest relief is only 20% (£1,200), so tax is £4,800 — higher than a basic-rate landlord on the same numbers. After-tax cash flow £4,200.

Separate property income rates from April 2027

Finance Act 2026 gives property income its own rates from 6 April 2027: 22%, 42% and 47% for the 2027/28 tax year, against 20%, 40% and 45% in 2026/27. Mortgage interest relief moves to 22%, so the credit rises by the same two points as the basic rate. Two ordering rules change as well: your personal allowance is used against employment, pension and other income before rental profit, and rental profit is taxed after that income but before savings and dividends.

Basic-rate landlord

£30,000 salary and £15,000 rental profit, no mortgage. The whole profit sits in the basic rate band, so the bill rises by £300 a year: two points on £15,000.

Higher-rate landlord with a mortgage

£60,000 salary, £20,000 rental profit and £6,000 mortgage interest. Tax on the profit rises two points, and the bigger 22% credit gives part of it back: £280 a year more.

The calculator above shows the same comparison for your own figures. Wales: the Senedd can now set Welsh property rates, and these figures apply there only if it sets them to match. Scotland: the Scottish Parliament can set its own property income rates from 2027/28 and has not yet done so, so the calculator shows no figure for Scottish taxpayers.

Allowable vs non-allowable costs

Deductible from rental income Not deductible (or relieved differently)
Letting agent / management fees Mortgage interest (20% credit instead)
Buildings & contents insurance Mortgage capital repayments
Repairs & maintenance (like-for-like) Capital improvements (add to CGT base cost)
Council tax & utilities you pay Your own time / labour
Ground rent, service charges, accountancy Costs of buying / selling (CGT, not income)

Small lettings can instead claim the £1,000 property allowance in place of actual expenses — whichever gives the lower tax.

Frequently asked questions

How is rental income taxed in the UK?
Rental income is added to your other income and taxed at your marginal income tax rate (20%, 40% or 45%). You can deduct allowable expenses such as letting agent fees, insurance, repairs, and maintenance. However, mortgage interest is no longer deductible — instead you receive a 20% tax credit on the interest paid.
What is the mortgage interest tax relief for landlords?
Since April 2020, landlords can no longer deduct mortgage interest from rental income. Instead, they receive a basic rate (20%) tax credit on their mortgage interest payments. This means higher and additional rate taxpayers pay more tax on rental income than before the 2017 changes — the Section 24 restriction.
What is the £1,000 property allowance?
The property allowance lets you earn up to £1,000 of gross rental income tax-free without reporting it. If your rental income is between £1,000 and £2,500 you must tell HMRC, and above £2,500 of profit (or £10,000 of income) you must file a Self Assessment return. If your income is over £1,000 you can either deduct the £1,000 allowance instead of actual expenses, or claim actual expenses — whichever is higher.
What expenses can I deduct from rental income?
Allowable expenses include letting agent fees, buildings and contents insurance, maintenance and repairs (not improvements), council tax and utility bills if paid by you, ground rent and service charges, accountancy fees, and direct costs such as advertising for tenants. Capital improvements and mortgage capital repayments are not deductible — mortgage interest gets the separate 20% credit instead.
Do I pay National Insurance on rental income?
No. Rental income from being a landlord is treated as investment income, not earnings, so there is no Class 1, 2 or 4 National Insurance on it. The only exception is if you run a property business at a scale and level of activity that HMRC treats as a trade (for example, a furnished holiday let business with substantial services), which is rare.
How does Section 24 affect higher-rate landlords?
A higher-rate (40%) or additional-rate (45%) landlord is taxed on the full rental profit before mortgage interest, but only gets the interest relief back as a 20% credit. So a higher-rate landlord effectively pays 40% on rental profit while recovering interest at only 20% — the gap is the Section 24 cost. Basic-rate (20%) landlords are unaffected because their tax rate matches the credit rate.
Can the Section 24 credit give me a refund?
No. It is a tax reducer, not a repayable credit. The reduction is 20% of the lowest of three amounts: your finance costs for the year plus any brought forward, your property business profits, and your adjusted total income — the income above your personal allowance. If your rental profit sits inside your personal allowance, the third amount is nil and you get no reduction this year; the whole of the finance costs is carried forward and can be used in a later year instead.
What are the new property income tax rates from April 2027?
From 6 April 2027 (the 2027/28 tax year) rental profit in England, Wales and Northern Ireland is taxed at separate property rates of 22%, 42% and 47%, up from 20%, 40% and 45%. Mortgage interest relief rises with the basic rate, to 22%. Your personal allowance is set against employment, pension and other income first, and rental profit is taxed after that income but before savings and dividends. In Wales the rates depend on the Senedd setting its own property rates to match, and the Scottish Parliament can set separate Scottish property rates; neither has done so yet.
Do I need to file a Self Assessment for rental income?
You must register for Self Assessment and file a return if your rental profit is more than £2,500, or your total rental income before expenses is more than £10,000. Between £1,000 and £2,500 of profit you should contact HMRC, who may collect the tax through your tax code. Under £1,000 of gross income the property allowance covers it and no reporting is needed.

Sources

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