Individual landlords pay income tax on rental profit, which is rent minus allowable costs, added to other income. Mortgage interest is not deducted. You get a tax reduction of 20% of the interest instead, rising to 22% in April 2027, when property income rates go up to 22%, 42% and 47%. Enter your own figures below to see your estimated bill.
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The purchase price and stamp duty, improvements that add something new (an extension, first-time double glazing, central heating where there was none), the capital part of mortgage repayments, your own time, and fines or penalties.
For homes you own personally, mortgage interest is not deducted from your rent. Instead you get a tax reduction worth 20% of the interest in 2026/27 and 22% in 2027/28. The reduction is limited to the lowest of your interest, your rental profit and your income above the personal allowance. Any unused interest carries forward.
| Example: rent £20,000, costs £3,000, mortgage interest £8,000 | Other income £40,000 | No other income |
|---|---|---|
| Rental profit | £17,000 | £17,000 |
| Tax on the profit before the interest reduction | £4,746 | £886 |
| Mortgage interest reduction | -£1,600 | -£886 |
| Tax due 2026/27 | £3,146 | £0 |
| Interest carried forward | £0 | £3,570 |
With no other income, only £4,430 of the profit is above the personal allowance, so the reduction is capped and £3,570 of interest carries forward.
You can deduct £1,000 from your gross rent instead of claiming your actual costs. It only helps when your costs are below £1,000. If you use it you cannot also claim your costs, the mortgage interest reduction or replacement of domestic items relief. The calculator tests both routes and shows the lower tax.
From 6 April 2027, property income in England, Wales and Northern Ireland is taxed at separate rates, two points higher than the normal rates. The mortgage interest reduction rises to 22% in step.
| Band | 2026/27 | From April 2027 |
|---|---|---|
| Basic rate | 20% | 22% |
| Higher rate | 40% | 42% |
| Additional rate | 45% | 47% |
| Mortgage interest reduction | 20% | 22% |
On the default example in the calculator (£18,000 rent, £5,100 costs, £6,000 mortgage interest, £35,000 other income) the estimated tax goes from £1,380 in 2026/27 to £1,518 in 2027/28. The bands themselves stay frozen.
A tax bill over £1,000 usually means payments on account: next year's tax is paid in two instalments, in January and July, on top of the balance. If your gross property and self-employment income passes £50,000 from April 2026, £30,000 from April 2027 or £20,000 from April 2028, you must keep digital records and send quarterly updates.
Sources: GOV.UK: working out your rental income · GOV.UK: income tax rates. Property income rates from April 2027 are set by Finance Act 2026. General information, not personal tax advice.
See also the limited company vs sole trader calculator, or browse all free tax calculators.
Individual landlords pay income tax on rental profit, which is rent received minus allowable costs. The profit is added to your other income and taxed at 20%, 40% or 45%, and the first £12,570 of total income is covered by the personal allowance. From 6 April 2027, property income is taxed at 22%, 42% and 47% in England, Wales and Northern Ireland.
Not for residential lets owned personally. Mortgage interest is not deducted from your rent. You get a tax reduction of 20% of the interest in 2026/27, rising to 22% in 2027/28. The reduction is worked out on the lowest of your finance costs, your rental profit and your income above the personal allowance, and any unused interest carries forward.
It is a £1,000 allowance for property income. If your gross rent is under £1,000 you do not need to declare it. If it is more, you can deduct £1,000 instead of your actual costs, but you cannot claim both, and you give up the mortgage interest tax reduction and replacement of domestic items relief if you use it. The calculator picks whichever route gives the lower tax.
Costs wholly and exclusively for letting the property: insurance, ground rent, repairs and maintenance, letting agent and management fees, legal and accountancy fees, services and bills you pay, advertising, safety certificates, and travel to manage or repair the property. You can also claim the like-for-like cost of replacing furniture and appliances you supply. Improvements, the purchase price, and the capital part of mortgage payments are not claimable.
Property income rates rise by two percentage points to 22%, 42% and 47%, and the mortgage interest reduction rises to 22%. On the example in our calculator, with £18,000 of rent, £5,100 of costs, £6,000 of mortgage interest and £35,000 of other income, the estimated bill goes from £1,380 to £1,518, up £138.
Individual landlords can usually claim travel to manage or repair their properties, and many use the HMRC approved mileage rates: 55p a mile for the first 10,000 miles in 2026/27 and 25p after that. Keep a log. Trips combined with personal errands do not qualify, and if a letting agent manages the property the claim is harder to support.
Yes, once your gross income from property and self-employment is above the threshold: £50,000 from April 2026, £30,000 from April 2027 and £20,000 from April 2028, tested on your tax return from two years earlier. You then keep digital records and send quarterly updates to HMRC.
We prepare landlord tax returns, plan around the April 2027 rate rise and set you up for Making Tax Digital.
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