Landlord Tax Calculator — Calculate Tax on Rental Property Income
Calculate income tax on your UK rental income including mortgage interest relief restrictions and allowable expenses for 2026-27.
UK landlords pay income tax on rental profits at their marginal rate (20% 40% or 45%). Since April 2020 mortgage interest is no longer deductible as an expense but instead receives a 20% tax credit. This change significantly increased the tax burden for higher-rate taxpayer landlords. Allowable deductions include letting agent fees insurance repairs (not improvements) ground rent and service charges.
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Key Information
| Parameter | Details |
|---|---|
| Tax Rate on Rental Income | Your marginal rate (20%/40%/45%) |
| Mortgage Interest Relief | 20% tax credit only |
| Property Allowance | £1000 (instead of deducting expenses) |
| Capital Gains Tax on Sale | 18% or 24% |
Calculate your rental tax
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Use Calculator NowFrequently Asked Questions
How much tax do I pay on £20000 rental income?
If your total income (salary + rent) puts you in the 40% bracket: £20000 rental income minus £5000 expenses = £15000 profit taxed at 40% = £6000 tax. Plus if you have £8000 mortgage interest you get a 20% tax credit = £1600 relief. Net tax on rental: £4400. A basic rate taxpayer would pay £3000 on the same rental income minus the same £1600 credit = £1400 net.
Should I put my rental property in a limited company?
For new purchases higher-rate taxpayers benefit from a company structure: corporation tax is 25% versus 40% personal tax and full mortgage interest is deductible. However transferring existing property to a company triggers stamp duty and capital gains tax making it impractical for most existing landlords. For new investments the company route is increasingly popular especially for portfolio landlords.
What expenses can I deduct as a landlord?
Deductible: letting agent fees (10-15% of rent) buildings insurance landlord liability insurance repairs and maintenance (not improvements) ground rent and service charges council tax (if you pay it) utilities (if included in rent) advertising costs accountancy fees landlord certificates (gas electrical EPC). Not deductible: mortgage capital repayments property improvements personal expenses or your own time managing the property.
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Last updated: March 2026