Rental Income Tax Calculator

Rental profit (income minus allowable expenses) is added to your other income, such as salary, and taxed through the normal Income Tax bands, at whatever rate that profit falls into once your other income is accounted for. There's no separate 'landlord tax rate' - it's just Income Tax, calculated on top of everything else you earn.

No, not since the rules changed (fully in effect from the 2020/21 tax year onwards). Mortgage interest and other finance costs no longer reduce your taxable rental profit directly. Instead, you get a tax reduction worth 20% of your finance costs, applied after your tax bill is calculated. This can leave higher and additional-rate taxpayers worse off than under the old rules, since they no longer get 40% or 45% relief on that interest.

If your total rental income for the tax year is £1,000 or less, it's entirely tax-free and you don't need to declare it. If your income is over £1,000, you can choose to deduct the £1,000 allowance instead of your actual expenses (useful if your real costs are lower than £1,000), or deduct your actual allowable expenses instead - whichever gives you a lower taxable profit. You can't use both in the same tax year.

Costs wholly and exclusively for renting out the property: letting agent and management fees, landlord insurance, repairs and maintenance (not improvements), utility bills you pay, ground rent and service charges, and accountancy fees. It doesn't include mortgage interest (which gets the separate 20% tax reduction instead), or capital costs like a new kitchen or extension, which are instead offset against Capital Gains Tax when you sell.

The 20% tax reduction is capped at the lower of your finance costs and your rental profit for the year, so you can't use it to create an overall loss. Any unused finance costs can normally be carried forward and set against rental profits in future tax years.

Not historically, but the special Furnished Holiday Lettings (FHL) tax regime, which allowed full mortgage interest deduction and other reliefs, was abolished from April 2025. FHL properties are now taxed under the same rules as other rental property, which is what this calculator assumes.

Generally yes, if your rental income (before expenses) is over £1,000 in a tax year, you need to register for and complete Self Assessment to declare and pay tax on it. HMRC's income thresholds for reporting can change, so check current GOV.UK guidance for your specific situation.