How landlord tax works
Rental profit is added to your other income and taxed at your normal income tax rates. For 2026/27 (England, Wales and Northern Ireland) the Personal Allowance is £12,570, basic rate 20% applies up to £50,270, higher rate 40% up to £125,140 and additional rate 45% above that.
Section 24 and mortgage interest
Since April 2020, residential landlords can't deduct mortgage interest as an expense. Instead you get a tax credit of 20% of the interest, whatever tax band you're in. Higher-rate taxpayers therefore get less relief than they used to. The credit is limited to 20% of your property profit, and any unused interest can be carried forward.
Changes coming from April 2027
From 6 April 2027, property income will be taxed at its own rates: 22% (basic), 42% (higher) and 47% (additional), 2 percentage points above the main rates. Mortgage interest relief will be given at 22% instead of 20%. This calculator uses the 2026/27 rates. Check GOV.UK for the latest position.
What this estimate leaves out
- The Personal Allowance taper above £100,000 of income
- Scottish income tax rates
- Property owned jointly or through a limited company
- National Insurance, the £1,000 property allowance and other reliefs
If your qualifying property and self-employment income is over £50,000 (from April 2026), £30,000 (from April 2027) or £20,000 (from April 2028), you need to follow Making Tax Digital for Income Tax. For a figure you can rely on, speak to an accountant.
Frequently asked questions
Can landlords deduct mortgage interest?
Not directly. Under Section 24, residential landlords receive a basic-rate (20%) tax credit on their mortgage interest instead of deducting it from rental income.
What expenses can landlords claim?
Typical allowable expenses include letting and management fees, repairs and maintenance (not improvements), insurance, ground rent and service charges, utilities and council tax you pay, and safety certificates.
Is this calculator accurate for Scotland?
No. Scottish taxpayers pay different income tax rates, so the estimate will not be correct for them.