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Tax

Rental Income Tax Calculator

Work out the income tax on your rental profit. Enter your rent, mortgage interest and expenses to see the tax due at your marginal rate, with the 20% mortgage interest credit applied, and your post-tax profit. To see what Section 24 specifically costs you, use the Section 24 calculator, and to compare holding personally against a company, use limited company vs personal.

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Interest only. Since Section 24 this is a 20% credit, not a deduction.

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Agent fees, repairs, insurance, ground rent and so on - per year.

Your income tax band

Rental profit stacks on top of your other income, so pick the band it falls into.

Tax on your rental income£3,560An effective 29% of your rental profit.
Taxable rental profit£12,400Rent minus allowable costs, not interest.
Post-tax profit£1,840
20% mortgage interest credit£1,400The relief you get on mortgage interest under the current rules.

A guide to the income tax on rental profit at your marginal rate, not personal tax advice. It does not model your personal allowance or other income. Check your position with an accountant.

Questions landlords ask

Straight answers to the questions behind this calculator. The Padlord blog goes deeper on every topic here.

How is tax on rental income calculated?

You pay income tax on your rental profit, which is your rent minus allowable expenses such as letting fees, repairs and insurance. That profit is taxed at your marginal rate: 20%, 40% or 45%. Since Section 24, mortgage interest is no longer a deductible expense; instead you get a 20% tax credit on it.

Do I still pay tax on rental income if I have a mortgage?

Yes. You cannot deduct the mortgage interest from your rental income any more. You are taxed on the profit before interest, then get a 20% credit for the interest. That is why higher and additional-rate landlords now pay more tax than they did under the old rules.

How much rental income is tax-free?

There is a £1,000 property allowance, so if your gross rental income for the year is under £1,000 you do not pay tax on it or need to declare it. Above that you are taxed on the profit at your marginal rate. There is no separate rental allowance beyond that; your personal allowance is normally used up by your other income.

What expenses can I deduct from rental income?

Letting and management fees, repairs and maintenance (but not improvements), landlord insurance, ground rent and service charges, and other day-to-day running costs. Mortgage interest is the exception: it is a 20% tax credit rather than a deduction.

Is rental income taxed at 20% or 40%?

It depends on your total income. Rental profit stacks on top of your other earnings, so it is taxed at whichever band it falls into. If your other income already uses your basic-rate band, your rental profit is taxed at 40% (or 45% in the additional-rate band).

Related tools

Stamp duty refundCheck if you can claim back the stamp duty surcharge after selling your previous main home, how much it is worth, and the exact deadline to claim by.Stamp dutyWork out stamp duty (SDLT) on a UK property at today's rates, with the 5% buy-to-let surcharge, the effective rate and a band-by-band breakdown.Section 24 taxSee what the Section 24 mortgage-interest restriction costs a landlord: tax before and after the change, the 20% credit and your post-tax profit.

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