Rental Income Tax Calculator United Kingdom

If you let a residential property in the UK, HMRC taxes the profit as part of your income for the year. Since the Section 24 reforms changed the treatment of mortgage interest, the tax bill is no longer a matter of subtracting your costs. This calculator applies the 2026/27 Income Tax bands to your property profit, stacks that profit on top of your other income to find your marginal rate, and then applies the basic rate credit for finance costs to show the tax you owe.

How rental profit is worked out

Your taxable rental profit is the rent you receive minus allowable expenses. Rent covers everything a tenant pays you for using the property. Allowable expenses are the day-to-day costs of running the let: letting agent commission, repairs and maintenance, landlord insurance, ground rent and service charges, and any council tax or utility bills you pay instead of the tenant. Mortgage interest is not on that list, so the profit the calculator shows is rent minus the non-finance costs. It is often larger than landlords expect, because the interest that used to reduce it is now dealt with separately.

Why mortgage interest is different

Before Section 24, a landlord deducted mortgage interest from rental income like any other expense, so relief came at their top rate of tax. Now finance costs give a tax reduction of 20% of the interest, the basic rate, whether you are a basic, higher or additional rate taxpayer. For a basic rate landlord the result is roughly the same as before. For a higher rate landlord it is worse: profit before interest is taxed at 40%, and only 20% of the interest comes back as a credit. That is why two landlords with identical cash flow can face very different tax bills depending on their other income.

How your other income changes the answer

Rental profit is added on top of your employment, pension, self-employment or other taxable income, and it is taxed in whichever bands it falls into. A landlord already earning near the higher rate threshold can find even a modest rental profit taxed partly at 20% and partly at 40%. The calculator works out the tax on your other income alone, then on your other income plus the property profit, and takes the difference as the tax on the rental slice. It also models the personal allowance, currently {{p:GB.allowance.personal|money0}}, and its taper for incomes above £100,000.

The Section 24 credit in practice

Once the tax on the profit is known, the calculator subtracts the finance cost credit of 20% of your mortgage interest. The credit is capped at the tax due on the property income, so it can remove your rental tax but never create a refund. The cap matters for landlords whose interest is large relative to their profit, often those with high loan-to-value mortgages or when interest rates are high. The tool shows the credit separately from the tax before the credit, so you can see what Section 24 relief is worth to you.

A worked example

Suppose you receive £15,000 in rent, spend £3,000 on allowable expenses, pay £5,000 in mortgage interest and have £50,000 of other income. Your property profit is £12,000. Added to £50,000 of other income, £270 of it falls in the basic rate band and the remaining £11,730 in the higher rate band, so the tax on the rental slice is £4,746. The Section 24 credit is 20% of the £5,000 interest, £1,000, which leaves £3,746 of tax on the rental profit. A basic rate landlord with the same rental figures would pay much less, because the profit would be taxed at 20%.

Assumptions and limitations

This is a planning estimate using the 2026/27 Income Tax bands and the 20% Section 24 credit rate, held as parameters sourced from gov.uk and reviewed each tax year. It assumes the property is held personally rather than through a company, that the figures cover a single tax year, and that your expenses are allowable. It does not model the £1,000 property allowance, jointly owned property splits, furnished holiday let rules, capital gains on sale or the carry-forward of unused finance credit. It also assumes all your other income is taxed under the same Income Tax bands. For more than a first estimate, check current HMRC guidance or speak to an accountant before filing your return.

About This Rental Income Tax Calculator

Use this rental income 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.