Landlord Income Tax Calculator
Calculate income tax on your rental profits including Section 24 mortgage interest restrictions. See your true tax liability as a landlord and understand how the rules affect your returns.
Income & Expenses
Employment, self-employment, pensions, etc.
Allowable Expenses
You receive a 20% tax credit (Section 24)
Tax Calculation
Income Tax on Rental
£826
Section 24 Credit
£0
Net Tax After Credit
£826
Net Rental Profit
£15,874
Effective Tax Rate
4.59%
Section 24 Rules Apply
Mortgage interest is no longer deductible from rental income. You receive a 20% tax credit instead.
| Band | Rate | Taxable | Tax |
|---|---|---|---|
| Basic (20%) | 20.00% | £4,130 | £826 |
| Total Income Tax | £826 | ||
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Income Allocation
Disclaimer: This tool does not constitute financial advice. We do not recommend taking actions based solely on these results. The calculator makes assumptions and results may be inaccurate due to changes in government policy, interest rates, or personal circumstances. You use this information at your own risk. We can't guarantee to be perfect, so do note you use the information at your own risk and we can't accept liability if things go wrong. For official guidance, visit Gov UK.
Section 24 Explained
Section 24 Explained
Since April 2020, landlords can only claim a 20% tax credit on mortgage interest, not a full deduction. Higher-rate taxpayers effectively pay tax on rental income before mortgage costs. Use our stamp duty calculator to estimate initial purchase costs.
Tax Bands for Rental Income
Rental profit is added to your employment income. This can push you into higher tax bands: 20% basic rate, 40% higher rate, or 45% additional rate. Section 24 amplifies this impact. Review our landlord guide for full tax implications.
Allowable Expenses
Deduct maintenance, insurance, letting agent fees, and other property costs from rental income. Mortgage interest is no longer fully deductible - only a 20% tax credit applies. Calculate net yield with our rental yield calculator.
Example Tax Calculations
| Employment Income | Rental Income | Rental Expenses | Rental Profit | Est. Tax Due |
|---|---|---|---|---|
| £25,000 | £12,000 | £3,000 | £9,000 | £1,800 (20%) |
| £40,000 | £18,000 | £4,000 | £14,000 | £4,800 (34%)* |
| £60,000 | £24,000 | £6,000 | £18,000 | £7,200 (40%) |
| £80,000 | £30,000 | £8,000 | £22,000 | £8,800 (40%) |
| £130,000 | £36,000 | £10,000 | £26,000 | £11,700 (45%) |
* Example assumes some mortgage interest. Section 24 can cause effective tax rates between bands. These are simplified estimates.
Special Considerations
Property Allowance (£1,000)
If your rental income is under £1,000 per year, you don't need to report it. If over £1,000, you can claim either the allowance or actual expenses - whichever is higher.
Wear and Tear / Replacement Relief
The 10% wear and tear allowance was abolished in 2016. You can now only deduct the actual cost of replacing furnishings, appliances, and furniture in furnished lettings.
Furnished Holiday Lettings Changes
From April 2025, the Furnished Holiday Lettings regime is being abolished. This removes beneficial tax treatment including full mortgage interest relief and capital allowances.
Record Keeping Requirements
Keep records of all rental income and expenses for at least 5 years after the 31 January submission deadline. HMRC can investigate and charge penalties for poor record keeping.
Critical: Section 24 Means Higher-Rate Taxpayers Can't Fully Deduct Mortgage Interest
Section 24 restricts mortgage interest relief to a 20% tax credit only - you can no longer deduct mortgage interest at 40% or 45%. This means higher-rate taxpayers effectively pay tax on rental income before mortgage costs are considered. Many landlords now use limited company structures to avoid Section 24. Always consult an accountant for tax planning advice.
Frequently Asked Questions
How is rental income taxed in the UK?
Rental income is added to your other income and taxed at your marginal rate: 20% basic rate, 40% higher rate, or 45% additional rate. You can deduct allowable expenses such as letting agent fees, insurance, maintenance, and ground rent from your rental income before calculating tax.
What is the Section 24 mortgage interest restriction?
Since April 2020, individual landlords can no longer deduct mortgage interest from rental income. Instead, they receive a 20% tax credit on mortgage interest payments. This means higher-rate taxpayers effectively pay more tax on rental profits compared to the pre-2017 rules.
What expenses can landlords deduct?
Allowable deductions include letting agent fees, buildings and contents insurance, ground rent and service charges, maintenance and repairs (but not improvements), accountancy fees, advertising for tenants, and travel costs for property management. Mortgage interest is only available as a 20% tax credit.
Is it more tax-efficient to use a limited company?
Companies pay Corporation Tax at 25% on rental profits and can deduct full mortgage interest as a business expense. This is often more tax-efficient for higher-rate taxpayers. However, extracting profits via dividends incurs additional tax, and transferring existing properties to a company triggers SDLT and CGT.
Do I need to register for Self Assessment?
Yes, if your rental income exceeds £1,000 per year (the property allowance), you must register for Self Assessment and file a tax return. You should register by 5 October following the end of the tax year in which you first received rental income.
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Emma Richardson, MRICS
Chartered Surveyor & Property Tax Specialist
Emma Richardson is a RICS-qualified Chartered Surveyor with over 12 years of experience in UK property taxation. She founded Stamp Duty Calculator to help buyers understand the complex world of property transaction taxes.