Buy-to-Let Tax Calculator United Kingdom

Mortgaged residential landlords in the UK are taxed differently from almost any other business because of a rule called Section 24. Since it was fully phased in, individual landlords cannot deduct mortgage interest from rental income before working out tax. This calculator applies the 2026/27 rules, the restricted interest relief and the 20% tax credit that replaced it, to show what a landlord owes and the net cash left after tax.

What Section 24 changed

Before 2017 a landlord deducted mortgage interest as an expense, so only the profit after interest was taxed. Section 24 removed that deduction for residential lettings held personally, phasing it in until 2020. Taxable rental profit is now the rent minus other allowable expenses (repairs, letting agent fees, insurance, ground rent) but not the mortgage interest. Instead you get a tax credit worth 20% of the interest, taken off your final tax bill. For a basic rate taxpayer the two roughly cancel out. For a higher rate taxpayer they do not: the profit is taxed at 40% while the interest relief is only 20%, so the effective tax rises sharply.

How the calculation works

Your taxable rental profit is added on top of your other income, so its rate depends on what you already earn. The calculator taxes that profit at your marginal rate, then subtracts a credit of 20% of your mortgage interest, capped at the profit. The result is your rental tax. Take the tax, the interest and the other expenses away from the rent and you have the net cash the property generates. A property that looks profitable before tax can leave a higher rate landlord with very little afterwards, which is why many landlords have reviewed how they hold property.

A worked example

A landlord earning £50,000 has £15,000 of annual rent, £6,000 of mortgage interest and £2,000 of other expenses. The taxable profit is £13,000, because only the £2,000 of expenses is deducted. Added to the £50,000 salary, £270 of it falls in the basic rate band and £12,730 in the higher rate band, giving £5,146 of tax on the profit. The 20% credit on £6,000 of interest is £1,200, so the rental tax is £3,946. After £2,000 of expenses, £6,000 of interest and £3,946 of tax, the £15,000 of rent leaves £3,054 of net cash. A basic rate landlord with the same property would pay much less, because their profit is taxed at 20%, the same rate as the credit.

Higher rate versus basic rate landlords

The biggest factor in a landlord’s tax is the band the rental profit falls into. Because the profit sits on top of your salary, a modest rental can push a higher earner further into the 40% band while interest relief stays at 20%. Two landlords with identical properties can keep very different amounts of cash. This is why some couples put a rental in the lower earner’s name, or consider a limited company, where interest remains deductible against Corporation Tax.

How to use the calculator

Enter the annual rent, the annual mortgage interest, your other allowable expenses and your other income before tax. The result shows the taxable rental profit, the Section 24 interest credit, the tax on the rental profit, the net cash you keep for the year and per month, and the tax as a share of rent. Use it to test a purchase before you buy, to see the effect of a rate rise on your interest, or to compare holding personally with other structures.

Assumptions and limitations

This is a planning estimate, not tax advice. It uses 2026/27 Income Tax bands and the 20% Section 24 credit, and applies the personal allowance taper over £100,000. It models a personally held residential let. It does not cover the £1,000 property allowance, furnished holiday lets, jointly owned splits, rent-a-room relief, capital allowances, losses carried forward, the High Income Child Benefit Charge, or holding through a limited company. It also excludes Stamp Duty on purchase and Capital Gains Tax on sale. All rates and thresholds are stored as parameters sourced from HMRC and reviewed each tax year.

About This Buy to Let Tax Calculator

Use this buy to let tax calculator to get an instant, accurate estimate. The figures follow official GOV.UK guidance and every rate and threshold is kept up to date for 2026. Adjust the inputs above to match your situation, or browse all our calculators to plan your next step.