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Landlord Tax Calculator
Estimate the income tax on your rental profit for 2026/27, with mortgage interest relief worked out the way HMRC sets it out.
Individual landlords cannot deduct mortgage interest from rental profit. Since 6 April 2020, finance costs have instead given a tax credit at the basic rate of 20%, a rule often called Section 24. For a basic-rate taxpayer the effect can be small. For a higher-rate taxpayer it can mean paying tax on rent that went straight to the lender.
Enter the rent, your running costs, your mortgage interest and your other income. The calculator works out the tax your rental profit adds to your bill for 2026/27, the credit you get for the interest and what is left each month.
It is built for taxpayers in England and Northern Ireland. Scotland has its own income tax rates and bands, and Wales sets Welsh rates of income tax, so check the rates that apply to you if you live there.
CALCULATOR
Tax on your rental profit, 2026/27
Rent received in the 2026/27 tax year
Letting and management fees, repairs, insurance, service charges, accountancy. Not improvements
Interest and loan fees only, not capital repayments
Salary, pension or self-employed profit for 2026/27. Not savings or dividends
Income tax on rental income
Rental profit, before finance costs
Tax on rental profit before the credit
Finance cost credit at 20%
Effective rate on rent received
Monthly net after interest and tax
Annual net after interest and tax
Extra tax from the finance cost restriction
Finance costs carried forward
Highest band reached
Save to PROXERAAssumes 2026/27 rates for England and Northern Ireland, one individual landlord letting UK residential property, other income from salary, pension or self-employment, no savings or dividend income, and no losses or finance costs brought forward. Net figures deduct mortgage interest but not capital repayments. Default inputs are illustrative examples, not a real property or client.
HOW IT WORKS
How it's calculated
1. Rental profit
Rental income less allowable costs. Finance costs are not deducted. With the example figures, £15,600 of rent less £3,000 of costs is a rental profit of £12,600, even though £8,000 of it goes on mortgage interest.
2. Tax on the profit
The profit is added to your other income and taxed at the 2026/27 rates. The tax on your rental income is the tax on the total less the tax you would pay on your other income alone. The Personal Allowance of £12,570 falls by £1 for every £2 of income above £100,000, and is zero from £125,140.
| Band, 2026/27 | Taxable income | Rate |
|---|---|---|
| Personal Allowance | Up to £12,570 | 0% |
| Basic rate | £12,571 to £50,270 | 20% |
| Higher rate | £50,271 to £125,140 | 40% |
| Additional rate | Over £125,140 | 45% |
In the example, £45,000 of other income plus £12,600 of profit is £57,600, which takes £7,330 of taxable income into the higher rate. Tax on the rental profit before the credit is £3,986.
3. The finance cost credit
You get a tax reduction of 20% of the lowest of three figures: your finance costs, your property profit, and your adjusted total income above the Personal Allowance, excluding savings and dividends. If the profit or income figure is the lowest, the unused finance costs carry forward to later years. The reduction cannot create a refund.
In the example the lowest figure is the £8,000 of interest, so the credit is £1,600 and the tax on your rental income is £2,386. That is 15.3% of the rent, and leaves £2,214 a year, about £185 a month, after interest and tax. If the interest were fully deductible, the tax would be £920, so the restriction costs £1,466 a year here.
Changes from April 2027
The November 2025 Budget announced separate rates for property income from 6 April 2027: 22%, 42% and 47% in England, Wales and Northern Ireland, with the finance cost credit at the 22% property basic rate. This calculator applies the 2026/27 rates only.
Weighing up a company structure? The limited company calculator puts both routes side by side, and the limited company buy-to-let guide covers the wider picture. Once a property is let, PROXERA keeps its income, costs and documents in one place for the year-end figures.
FAQ
Landlord tax, answered
What is Section 24?
The common name for the restriction on finance cost relief for individual landlords. Since 6 April 2020, mortgage interest and other finance costs on residential lets cannot be deducted from rental profit. Instead, they give a tax reduction at the basic rate of 20%.
Does the restriction apply to limited companies?
No. A company that lets residential property deducts its interest under the Corporation Tax rules. See how the two routes compare with the limited company calculator.
Why is the effective rate on my rent so high?
Because tax is worked out on profit before mortgage interest, and the interest only earns a 20% credit. A higher-rate taxpayer pays 40% on rent that went to the lender and gets 20% back, so tax can be a large share of what is left after interest.
Are property income tax rates changing?
Yes, from 6 April 2027. The November 2025 Budget announced separate property income rates of 22%, 42% and 47% for England, Wales and Northern Ireland from the 2027/28 tax year, with the finance cost credit worked out at the 22% property basic rate. They do not apply to 2026/27, so this calculator uses 20%, 40% and 45% and a 20% credit.
I live in Scotland or Wales. Can I use this?
The calculator is built for taxpayers in England and Northern Ireland. Scotland has its own income tax rates and bands, and Wales sets Welsh rates of income tax, so check the rates that apply to you on GOV.UK.
Which costs can I deduct?
Revenue costs of the letting, such as letting agent and management fees, accountant's fees, maintenance and repairs, insurance, utility bills and service costs. Improvements, such as an extension, are capital costs and cannot be claimed against rental income, though they may count for Capital Gains Tax when you sell.
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Read the guideThis calculator gives an estimate based on the information entered and the 2026/27 rates for England and Northern Ireland. It is general information, not tax advice, and it does not cover every relief or circumstance. Default inputs are illustrative examples, not a real property or client. Confirm your position with a qualified tax adviser, or contact us to talk through your plans. Property investment involves risk: capital is at risk and past performance is not a reliable indicator of future results.
Sources: GOV.UK, Income Tax rates and Personal Allowances, GOV.UK, Income over £100,000, GOV.UK, Changes to tax relief for residential landlords: how it's worked out, GOV.UK, Working out your rental income, HMRC Property Income Manual, PIM2052, GOV.UK, Change to tax rates for property, savings and dividend income: technical note, GOV.UK, Income Tax: changes to tax rates for property, savings and dividend income, GOV.UK, Welsh Income Tax. Checked 22 October 2026.
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