Landlord and rental income tax calculator

Rental profit is rent received minus allowable expenses such as letting agent fees, repairs, insurance, ground rent and service charges. It is taxed alongside your salary at 20%, 40% or 45%, or at Scottish rates if you are a Scottish taxpayer. Letting property is usually an investment activity for tax, so no Class 1 or Class 4 National Insurance is due on the profit.

If your gross rent is £1,000 or less, it is tax-free and you need not report it. Above that, you can deduct either the £1,000 allowance or your actual expenses. Using the allowance also gives up the mortgage interest credit, so the calculator picks whichever leaves you better off.

Since April 2020, mortgage interest and other finance costs on residential property give a tax credit of 20% of the interest, and the interest itself stays in your taxable profit. For a basic rate taxpayer the result matches a full deduction. A higher rate taxpayer pays 40% tax on the interest and gets 20% back, so loses half the relief, and some landlords find their profit on paper pushes them into a higher band. Furnished holiday lets lost their special treatment from April 2025 and now follow the same rules.

From 6 April 2027 property income will be taxed at its own rates of 22%, 42% and 47%, two points above the rates on earnings. That adds £200 a year in tax for every £10,000 of rental profit, whatever your band. Landlords whose self-employed and property income is over £50,000 must also use Making Tax Digital from 6 April 2026, with the threshold falling to £30,000 from April 2027 and £20,000 from April 2028.

Property owned jointly by spouses or civil partners is taxed 50/50 by default, even if you own it in unequal shares. If your shares are unequal, a Form 17 declaration lets each of you be taxed on your real share, which can move income to the lower earner.