Property
UK Rental Income Tax Calculator (Section 24, 2026/27).
Calculate tax on UK rental income for 2026/27, including Section 24 mortgage interest relief restrictions, allowable expenses and the impact of being a higher-rate taxpayer.
UK rental profit is taxed at your marginal Income Tax rate — 20%, 40% or 45% (or the Scottish equivalents) — on rent received less allowable expenses. Since Section 24, mortgage and finance interest is no longer deductible from rental income; instead you receive a basic-rate (20%) tax credit on the interest. This calculator applies Section 24 for 2026/27 and shows how it raises the effective rate for higher-rate landlords in particular.
Reviewed by Kamran Ishaq FCCA, Founder & CEO · Last updated
Tax on rental income
£1,500
After Section 24 mortgage interest credit
Effective rate
11.1%
- Gross rent
- £15,000
- Net rental profit
- £13,500
- Mortgage interest credit
- £1,200
Rental tax breakdown
- Gross rent£15,000.00
- Less expenses (£1,500.00)−£1,500.00
- Net rental profit£13,500.00
- Tax before credit£2,700.00
- Less S.24 credit (20% of £6,000.00 interest)−£1,200.00
- Tax payable£1,500.00
Source: gov.uk landlord tax guidance. Rates for the 2026/27 tax year.
Worked example
How Section 24 changes a landlord’s tax bill.
Mortgage interest reduces your cash profit, but an individual landlord cannot deduct it when calculating taxable rental profit. Instead, HMRC gives a tax credit equal to 20% of the qualifying finance cost.
£18,000 rent with £6,000 mortgage interest
Assume annual rent of £18,000, £3,000 of deductible running costs and £6,000 of mortgage interest. The cash profit is £9,000, but the taxable rental profit is £15,000 because the interest is excluded. For a 40% taxpayer in England, Wales or Northern Ireland, that produces £6,000 of Income Tax before a £1,200 Section 24 credit—leaving £4,800 tax and £4,200 after-tax cash profit.
- Taxable rental profit
- £15,000
- Tax after Section 24 credit
- £4,800
Scottish taxpayers use Scottish Income Tax bands, so their result can differ. A company-owned property follows Corporation Tax rules instead. For filing support, see our landlord Self Assessment service.
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Frequently asked
questions.
Since April 2020, mortgage interest relief has been restricted to a 20% basic-rate tax credit. Higher-rate landlords pay tax on rental profit before mortgage interest, even where the interest cost exceeds the cash profit.
Common deductible costs include letting agent fees, landlord insurance, repairs and maintenance, ground rent and service charges, and accountancy fees. Capital improvements are not deductible against rental income.
Yes if your rental profit exceeds £1,000 per year, above the property income allowance, or if the income needs to be reported because you already complete a Self Assessment for another reason.
For higher-rate taxpayers with multiple properties, a limited company can shelter profit at 19% to 25% Corporation Tax rather than 40% to 45% Income Tax. However, SDLT and Capital Gains Tax on transfer must be weighed carefully.
Gross rental income up to £1,000 per year is tax-free with no need to report it. Above that, you can deduct either actual expenses or the allowance, but not both.
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