Rental income taxinstant results in your browser

Rental profit for an individual landlord is taxed as income, stacked on top of your other earnings. There is no separate "rental tax rate" — the rate you pay on the next pound of rent is your marginal income-tax rate once salary, pension and dividends are counted. That is why two landlords with identical properties can pay very different tax: one is a basic-rate (20%) taxpayer, the other a higher-rate (40%) taxpayer, so the same £5,000 profit costs one £1,000 and the other £2,000.

Taxable rental profit is gross rent minus allowable expenses — but NOT mortgage interest. Since Section 24→ fully phased in (April 2020), interest is excluded from the profit calculation and instead earns a 20% basic-rate tax credit (ITTOIA 2005 s.272A). Allowable expenses include letting-agent fees, repairs and maintenance, replacement of domestic items, landlord insurance, ground rent and service charges, accountancy and safety certificates. Capital improvements (a new extension, a first-time kitchen upgrade beyond like-for-like) are not allowable against income — they reduce Capital Gains Tax→ on sale instead.

This calculator uses the 2026/27 England, Wales and Northern Ireland bands, which are frozen until at least April 2028: a £12,570 personal allowance, 20% basic rate to £50,270, 40% higher rate to £125,140, and 45% additional rate above. Crucially it models the personal-allowance taper — above £100,000 of total income you lose £1 of allowance for every £2 of income, creating a 60% effective band between £100,000 and £125,140. Adding rental profit can push a landlord into that trap even when their salary alone would not.

Scotland is different. Scottish taxpayers pay Scottish income-tax rates and bands (starter, basic, intermediate, higher, advanced and top rates) on non-savings income including rental profit. This calculator uses the rest-of-UK bands; a Scottish landlord should treat the output as indicative and check the Scottish rates for the exact figure.

The figure that matters for a buy-to-let decision is your take-home after tax and interest. A higher-rate landlord with a big mortgage can be cash-flow positive before tax but barely break even after it, because the rent is taxed at 40% while the interest only attracts a 20% credit. The calculator shows tax due, the Section 24 credit, your take-home and the effective tax rate on gross rent in one view, so you can see whether the property genuinely pays after HMRC takes its share.

Joint owners are taxed separately on their own share. Spouses who own jointly are presumed to split income 50/50 unless they hold the property as tenants-in-common in unequal shares and file a Form 17 declaration. Splitting income with a lower-earning spouse is one of the few entirely legitimate ways to cut the rental tax bill — model both owners separately to see the combined saving.