UK Rental Income Tax Calculator

Costs you have wholly for the letting: letting agent and management fees, repairs and maintenance, buildings and landlord insurance, ground rent and service charges, accountancy fees, and bills you pay for the tenant such as council tax or utilities. Replacing furniture and appliances in a furnished let also counts. Improvements, such as an extension or a better kitchen than the one you had, are not deductible from rent; they may reduce Capital Gains Tax when you sell. Mortgage interest is dealt with separately, through the 20% credit.

You can't deduct mortgage interest and other finance costs from your rent. Instead your tax is reduced by 20% of the lowest of three figures: your finance costs, your rental profit, and your non-savings income above the Personal Allowance. Any finance costs that can't be used this way are carried forward to the next year. For a basic-rate taxpayer this usually works out the same as the old rules, but a higher-rate taxpayer gets 20% relief instead of 40%, and the interest still counts as profit, which can push income into a higher band or over £100,000.

You can take £1,000 off your rent instead of deducting your actual expenses, but you can't do both, and you then can't claim the mortgage interest credit either. The allowance is usually only worth it when your costs are small. If your rent is £1,000 or less, the allowance covers all of it and you don't need to tell HMRC. The calculator works out both ways and tells you which leaves less tax.

If you let a furnished room in the home you live in, the first £7,500 a year is tax-free, or £3,750 if someone else also receives income from letting in the same home. Under the limit it's automatic and you don't need to do anything. Over it, you can either pay tax on the rent above £7,500 with no expenses, or use normal rules and deduct your actual expenses; you choose whichever leaves less tax. It doesn't apply to a home you let out while you live somewhere else.

Each owner is taxed on their own share of the rent, expenses and interest, at their own rates. Married couples and civil partners are taxed 50:50 by default, whatever the shares in the property. If you own it in unequal shares, you can be taxed on your real shares by sending HMRC form 17 with a declaration of your beneficial interests. Other joint owners are normally taxed on their actual shares. Choose your share, and enter the figures for the whole property.

A loss from letting residential property can't be set against your salary or other income. It's carried forward and set against your future rental profits, as early as possible. Enter any unused losses from earlier years under "Losses brought forward" and the calculator takes them off this year's profit. Mortgage interest never creates a loss; any you can't use is carried forward as a credit instead.

Making Tax Digital for Income Tax means keeping digital records and sending HMRC quarterly updates through compatible software. It applies from 6 April 2026 if your qualifying income is over £50,000, from 6 April 2027 if it's over £30,000, and from 6 April 2028 if it's over £20,000. Qualifying income is your share of the rent before expenses plus any self-employed turnover. HMRC decides using an earlier year's tax return, so this page's check is a guide.

If you need to pay tax on rent and don't already send a tax return, register for Self Assessment by 5 October after the end of the tax year. Tax for 2026/27 is due by 31 January 2028. If your bill is £1,000 or more and less than 80% of your tax is taken at source, you also make two payments on account towards the next year, each half of this year's bill, on 31 January and 31 July. That's why a first-year landlord can face a January payment one and a half times the bill.

The government has announced that from 6 April 2027 property income will be taxed at its own rates of 24%, 44% and 49% in England, Wales and Northern Ireland, four points above today's rates (two announced at the 2025 Budget and two more at the 28 October 2026 Budget), with the mortgage interest credit rising to 24%. This isn't law yet. The calculator shows an estimate of your tax under those rates, using today's allowances and bands. Scotland sets its own rates and isn't included.

The special tax rules for furnished holiday lets were abolished from 6 April 2025. Holiday lets are now taxed like any other rental property, so the mortgage interest rule applies to them too. You can use this calculator for a holiday let in the same way as for a long-term let.

Companies deduct mortgage interest in full and pay Corporation Tax rather than Income Tax, so some landlords with large mortgages buy through a company. But taking money out of a company is taxed again as salary or dividends, mortgages can cost more, and moving properties you already own into a company can trigger Capital Gains Tax and Stamp Duty. This calculator is for property you own personally. Take advice before changing how you own property.

It works out one person's Income Tax on UK residential rental profits for the 2026/27 tax year. It doesn't cover limited companies, commercial property, non-resident landlords, overseas property, capital allowances, the cash basis versus accruals choice, lease premiums, or Capital Gains Tax when you sell. Finance costs carried forward from earlier years aren't included. PAYE is assumed to have taken the right tax on any salary or pension with a standard tax code.