Landlord Tax Calculator (Section 24)
Calculate tax on rental income including Section 24 mortgage interest relief for buy-to-let landlords.
By Konstantin Iakovlev · Founder, Calks.uk
Last updated: · Verified against HMRC and GOV.UK 2026/27 rates
Disclaimer
This calculator is provided for informational purposes only and should not be considered as financial or tax advice. All calculations are performed locally in your browser — no personal data is collected or sent to our servers. Rates and thresholds are sourced from HMRC and GOV.UK and are updated for the current tax year. Always verify results with HMRC or consult a qualified professional before making financial decisions.
How It Works
Landlord income tax is calculated on your net rental profit — total rental income minus allowable expenses. Allowable expenses include letting agent fees, maintenance and repairs, insurance, accountancy fees, advertising costs and travel to the property. Since April 2020, mortgage interest cannot be deducted as an expense; instead, a 20% tax credit is given on finance costs.
Your rental profit is added to any other income to determine your tax band. Basic-rate taxpayers pay 20% on rental profits, higher-rate pay 40% and additional-rate pay 45%. The 20% mortgage interest tax credit is the same regardless of your band, meaning higher-rate taxpayers pay more effective tax on rental income with mortgage interest than under the old rules.
This calculator works out your landlord tax liability for the 2026/27 tax year. Enter your rental income, expenses, mortgage interest and other income to see the tax due, the effect of the finance cost restriction and your effective tax rate on rental profits.
UK landlord tax 2026/27 — income tax bands. Rental income added to other income, taxed at usual rates: 0% to £12,570; 20% to £50,270; 40% to £125,140; 45% above. National Insurance NOT payable on rental income (treated as 'unearned income'). Sample: £35,000 employment + £12,000 rental profit = £47,000 total. Tax on rental at 20% basic rate (within band) = £2,400. Same person earning £50,000 employment + £12,000 rental: rental partially taxed at 40% = significantly more.
Section 24 — mortgage interest restriction. Since April 2020, mortgage interest no longer deductible from rental income. Instead, 20% basic-rate tax credit applied. Sample: rent £15,000, mortgage interest £8,000. Pre-2017: profit £7,000, tax £1,400 (20% taxpayer) or £2,800 (40%). Post-2020: 'profit' £15,000 (interest not deducted) — tax £3,000 (20%) MINUS £1,600 credit = £1,400; OR tax £6,000 (40%) MINUS £1,600 credit = £4,400. Higher-rate taxpayers hit hardest — Section 24 effectively raised tax rate on rental income to 60-80%+ for highly-leveraged landlords.
Allowable expenses for landlords. Fully deductible: agent fees, insurance, repairs (NOT improvements), council tax/utilities if paid by landlord, gas safety, EPC, accountant, advertising for new tenants, ground rent and service charges (leasehold). Capital allowances on furnishings: replacement furniture allowed (Replacement of Domestic Items relief), NOT initial purchase. Mortgage interest: 20% tax credit only (Section 24). Travel to property: deductible at HMRC mileage rates if necessary for management.
Capital Gains Tax on selling rental property. 2026/27 CGT rates on residential property: 18% basic rate; 24% higher rate (reduced from 28% in April 2024 for higher rate). Annual Exempt Amount £3,000 (down from £12,300 in 2022). 60-day reporting and payment window (since 27 Oct 2021): file CGT return and pay tax within 60 days of completion. Sample: bought £200k, sold £350k. Costs £15k (stamp duty + legal both ways + improvements). Gain £135k. Less AEA £3k = £132k taxable. Tax at 24% = £31,680. Plus IHT planning if held in estate.
Limited company landlords — when worth it? SPV (Special Purpose Vehicle) limited company. Benefits: mortgage interest fully deductible against rent (no Section 24); Corporation Tax 25% (or 19% for under £50k profits) vs personal income tax up to 45%. Drawbacks: incorporation costs £500-£1,500; annual accounts £1,000-£1,800; double taxation when extracting profit (CT then dividend tax); SDLT on transferring existing personal portfolio (5% surcharge applies). Worth it from: 2-3 properties or £30k+ rental income, especially for higher-rate taxpayers with significant mortgage interest. Single property: usually not worth it.
Example: £18,000 rental income, £4,000 expenses, £7,200 mortgage interest, 40% taxpayer
- Net rental profit: £18,000 − £4,000 = £14,000
- Tax at 40%: £14,000 × 40% = £5,600
- Finance cost credit: £7,200 × 20% = −£1,440
- Net tax on rental income: £5,600 − £1,440 = £4,160
- Effective rate on total rental income: 23.1%
Frequently Asked Questions
- How does Section 24 affect my landlord profits?
- Section 24 (since April 2020): mortgage interest only attracts 20% basic-rate tax credit, NOT a deduction from rental income. Sample: £15,000 rental income, £8,000 mortgage interest, 40% taxpayer. Pre-2017: profit £7,000 → £2,800 tax. Post-2020: 'profit' £15,000 → £6,000 tax MINUS £1,600 credit = £4,400 tax. Same £8,000 interest but £1,600 less tax relief = effective rate jumps to 63%. Limited company route avoids Section 24.
- Should I use a limited company for buy-to-let?
- Worth it from 2-3 properties or £30k+ rental income for higher-rate taxpayers with significant mortgage interest. Benefits: full mortgage interest deduction (no Section 24); Corporation Tax 25% vs personal income tax up to 45%. Costs: £500-£1,500 incorporation; £1,000-£1,800/year accounts; SDLT 5% surcharge applies to all purchases; double taxation when extracting profit. Don't transfer existing portfolio without specialist advice — incorporation relief may be available but complex.
- What expenses can landlords claim?
- Fully deductible: agent fees (8-12% of rent), insurance (£200-£500/year), repairs (NOT improvements), accountancy, gas safety (£80-£120), EPC (£45-£120, valid 10 years), council tax/utilities if paid by landlord. Replacement Furniture Relief: like-for-like replacements only (NOT initial purchase). NOT deductible: mortgage capital repayment; improvements (these reduce CGT on sale instead). Use simplified mileage 45p/25p for travel to property.
- Capital Gains Tax on selling a rental property.
- 2026/27 CGT rates on residential property: 18% basic rate; 24% higher rate (reduced from 28% in April 2024). Annual Exempt Amount £3,000 (down from £12,300 in 2022). 60-day reporting and payment window: file CGT return and pay tax within 60 days of completion. Sample: bought £200k, sold £350k, costs £15k. Gain £135k − AEA £3k = £132k taxable. Tax at 24% = £31,680. Letting Relief abolished from April 2020. Principal Private Residence relief if was your main home.