Rental Income Tax Calculator
Work out the income tax on your rental profit for 2026/27 — including the Section 24 mortgage-interest credit and the £1,000 property allowance — stacked on top of your other income.
Last updated 2 July 2026 · Written and reviewed by Mustafa Bilgic
Rental income tax calculator
Section 24 credit, £1,000 allowance and 2026/27 bands.
Estimate only — figures use the latest published UK rates. Always confirm on GOV.UK.
How rental income is taxed in 2026/27
There is no separate landlord tax — yet. Your property profit (rent minus allowable expenses) is stacked on top of your salary, pension and other income and taxed through the normal 2026/27 bands: a £12,570 personal allowance, then 20% basic rate up to £50,270, 40% up to £125,140 and 45% above that — see our UK income tax rates guide for the full picture. Because rent sits on top, it is taxed at your highest marginal rate. HMRC's own rules are set out at GOV.UK.
£14,400 rent with £2,500 expenses leaves an £11,900 taxable profit. On top of a £35,000 salary that is all basic-rate: £2,380 of tax, minus a £1,200 credit for £6,000 of mortgage interest — £1,180 to pay, leaving £4,720 in your pocket after expenses, interest and tax.
Section 24, explained simply
Since Section 24 was fully phased in, residential landlords cannot deduct mortgage interest as an expense. Instead, you get a tax credit worth 20% of the interest, capped at your property profit. For a basic-rate landlord the result is much the same as the old deduction: £6,000 of interest earns a £1,200 credit either way. Higher-rate landlords feel the squeeze — the same figures on top of a £60,000 salary produce £4,760 of tax before the credit, but the credit is still only £1,200, leaving £3,560 to pay. The credit never exceeds basic rate, whatever rate you pay.
The £1,000 property allowance
Instead of claiming actual expenses, you can simply deduct a flat £1,000 property allowance — and rent under £1,000 a year can be tax-free entirely. The catch: claim the allowance and you give up both your expenses and the mortgage-interest credit. This calculator works the tax out both ways and automatically uses whichever leaves you with less to pay; with a mortgage and real running costs, actual figures almost always win.
What expenses can you claim?
| Cost | Allowable? |
|---|---|
| Letting agent and management fees | Yes |
| Repairs and maintenance (not improvements) | Yes |
| Landlord insurance | Yes |
| Ground rent and service charges | Yes |
| Utilities or council tax you pay for the property | Yes |
| Advertising for tenants, accountancy | Yes |
| Mortgage interest | No — 20% credit instead |
| Capital improvements (extensions, upgrades) | No — may reduce capital gains tax when you sell |
Improvements are not lost money at tax time — they can reduce the gain when you eventually sell, which you can model with our CGT property calculator. If you also have freelance or business income alongside the rent, our self-employed tax calculator handles that side.
April 2027: property income rates go up
Announced at Autumn Budget 2025: from April 2027, property income will be taxed at separate rates set 2 percentage points higher than normal income tax — 22%, 42% and 47%. On the £11,900 basic-rate profit in our example, that is roughly £238 more per year. It is worth building the higher rates into any purchase or refinancing sums you run today, and reviewing whether your current mix of rent, expenses and interest still stacks up once the change lands.
Frequently asked questions
How much tax will I pay on my rental income in 2026/27?
Rental profit — rent minus allowable expenses, or minus the £1,000 property allowance — is stacked on top of your other income and taxed at the normal rates: 20% basic, 40% higher and 45% additional. For example, an £11,900 profit on top of a £35,000 salary is all basic-rate, giving £2,380 of tax before any mortgage-interest credit.
Can I deduct my mortgage interest from rental income?
Not any more. Under Section 24, residential landlords cannot deduct mortgage interest as an expense. Instead you get a tax credit worth 20% of the interest, capped at your property profit — the same 20% whether you pay basic, higher or additional-rate tax.
What is the £1,000 property allowance?
You can deduct a flat £1,000 from rental income instead of claiming actual expenses, and rent under £1,000 a year can be tax-free entirely. If you claim the allowance you cannot also claim expenses or the mortgage-interest credit, so landlords with a mortgage are usually better off with their actual figures.
What expenses can landlords claim in 2026/27?
Typical allowable expenses include letting agent and management fees, repairs and maintenance (but not improvements), landlord insurance, ground rent and service charges, utilities or council tax you pay, advertising for tenants and accountancy. Mortgage interest is not an expense — it gets the separate 20% credit.
What changes for landlords in April 2027?
From April 2027, property income will be taxed at separate rates set 2 percentage points higher than normal income tax — 22%, 42% and 47% — as announced at Autumn Budget 2025. On an £11,900 basic-rate profit, that is roughly £238 more per year, so it is worth building into your sums now.