Landlord tax calculator
Updated
Individual landlords pay income tax on rental profit at their own rates, but mortgage interest is not deducted. Instead it earns a tax credit at 20% (Section 24), so higher-rate landlords pay more. Enter your rents, costs, interest and other income to see the tax on your rental profit.
Not financial advice. General information using HMRC rates for the current tax year (2026-27); your position may differ.
Letting agent fees, repairs, insurance, ground rent, service charges, accountancy and similar.
Interest only, not capital repayments.
Sets the band your rental profit falls in.
The finance costs times the credit rate, limited to the lowest of the costs, the rental profit and income above the personal allowance.
Illustrative only. A company deducts interest in full but pays tax again when profits are drawn out, and moving property into a company usually triggers capital gains tax and stamp duty.
Not financial advice. General information using HMRC rates for the 2026-27 tax year; your position may differ. Reviewed 30 October 2026.
Where the rent goes
- Expenses£3,00017%
- Mortgage interest£8,00044%
- Income tax£3,34619%
- Kept£3,65420%
Worked example
A landlord with £45,000 of salary lets a property for £18,000 a year, with £3,000 of expenses and £8,000 of mortgage interest. The rental profit of £15,000 is taxed with the salary, partly at the higher rate, and the interest earns a credit of £1,600. Income tax on the rental profit is £3,346, £1,600 more than if the interest were deducted in full.
How it works
- Rental profit is rent less allowable expenses. Mortgage interest is not one of them for a residential let.
- The profit is added to your other income and taxed in the band it falls in.
- Finance costs earn a tax credit at 20%, taken off the tax bill. It is limited to the lowest of the costs, the rental profit and your income above the personal allowance.
- The company line is corporation tax on rent less expenses and interest, for comparison only. It ignores the tax on taking money out of a company and the cost of moving a property into one.
What Section 24 does
Before the restriction, a landlord deducted mortgage interest from rent and saved tax at their top rate. Now the interest is not deducted; instead the landlord gets a tax credit of 20% of it. For a basic-rate landlord the two come to roughly the same. For a higher-rate landlord, each pound of interest that once saved 40p now saves 20p. Because the profit is no longer reduced by the interest, it can also push a landlord into a higher band, or past the point where the personal allowance is withdrawn.
Unused credit carries forward
If the credit is restricted, because the interest is more than the rental profit or your income is low, the unused part carries forward to later years of the same property business. This page shows one year and does not track the carry-forward.
Why the company figure is only illustrative
A company deducts all its interest and pays corporation tax, which is why the comparison is often made. But the profit is taxed again when you draw it out as dividends or salary, mortgages for companies often cost more, and moving a property you already own into a company is usually a sale at market value, with capital gains tax and stamp duty on it. Whether a company suits a particular landlord is a question for an adviser, not a calculator.
What this does not cover
Furnished holiday lettings, which lost their special treatment, and commercial property, where interest is still deductible; the property allowance, which some small landlords use instead of expenses; capital allowances; Scottish rates; and jointly owned property, where each owner reports their share. Property income rates in force: 20%, 40% and 45% by band.
Rates used for rental profit (2026-27)
| Item | Rate or threshold |
|---|---|
| Personal allowance | £12,570 |
| Basic rate band | 20% on the first £37,700 of taxable income |
| Higher rate | 40% up to £125,140 |
| Additional rate | 45% above £125,140 |
| Finance cost credit (Section 24) | 20% |
Source: Finance Act 2026 (Royal Assent 18 March 2026): dividend ordinary and upper rates up 2 points from 6 April 2026; ITTOIA 2005 s274A for the finance cost credit. England, Wales and Northern Ireland bands.
Want this worked out on your real numbers?
This page works on the figures you type. CoreFi can track your income, spending and tax position from the accounts you connect, on the same HMRC rates. It does not give tax advice.
Track your own numbersFrequently asked questions
Can landlords deduct mortgage interest?
Not for a residential let held personally. Instead you get a tax credit of 20% of the interest, taken off your income tax bill.
Does Section 24 affect basic-rate landlords?
Usually very little, because the credit matches the tax the deduction would have saved. It can still push someone into the higher rate, because the rental profit is no longer reduced by the interest.
Is it better to own rental property through a company?
Sometimes, and often not for property already owned. The company line above shows corporation tax only, as an illustration. Taking money out of the company is taxed again, and transferring property into one usually triggers capital gains tax and stamp duty.
Is this financial advice?
No. It is general information using HMRC rates for the current tax year, and your position may differ. For advice on how to hold property, speak to a qualified tax adviser.
More tax calculators
Not financial advice. This calculator gives general information using HMRC rates and thresholds for the 2026-27 tax year. It is not tax, legal or financial advice and does not take account of your circumstances; for advice, speak to a qualified accountant or tax adviser. CoreFi is a trading name of JG Core Ltd (company 16218779). Figures reviewed 30 October 2026.