Rental Income Tax Calculator
Used to determine your marginal tax band
Using actual expenses (better for you)
Rent, expenses & mortgage
How Your Tax Is Calculated
Section 24 Mortgage Interest
Your £4,000 mortgage interest is not deducted from your rental profit. Instead, you receive a 20% tax credit of £800.00.
Annual Cashflow Summary
How Rental Income Tax Works in the UK
Rental income from UK property is taxed as part of your total income. It's added on top of your employment or other income, so it's taxed at your marginal rate — 20%, 40%, or 45% depending on your total income. Unlike employment income, rental income is not subject to National Insurance.
You must report rental income to HMRC through a Self Assessment tax return if your gross rental income exceeds £1,000 per year. Tax is typically paid by 31 January following the tax year.
Property Income Allowance vs Actual Expenses
You have two options for reducing your taxable rental profit:
£1,000 Property Allowance
- Deduct £1,000 from gross rent — no receipts needed
- Best when your actual expenses are less than £1,000
- If total rent is under £1,000, no tax and no return needed
- Cannot be used alongside actual expenses
Actual Expenses
- Deduct real allowable costs (agent fees, repairs, insurance...)
- Best when expenses exceed £1,000
- Must keep receipts and records
- Mortgage interest is handled separately via Section 24
Section 24: Mortgage Interest Relief Changes
Since April 2020, residential landlords can no longer deduct mortgage interest from rental profits. Instead, you receive a 20% tax credit on the interest paid. This change particularly affects higher-rate taxpayers:
| Tax Band | Old Relief | New (S.24) | Extra Cost per £1k Interest |
|---|---|---|---|
| Basic (20%) | 20% deduction | 20% credit | £0 (no change) |
| Higher (40%) | 40% deduction | 20% credit | £200 |
| Additional (45%) | 45% deduction | 20% credit | £250 |
| 60% Trap Zone | 60% eff. deduction | 20% credit | £400 |
Common Allowable Landlord Expenses
Joint Ownership & Form 17
For married couples and civil partners, HMRC assumes rental income is split 50:50 by default, regardless of actual ownership. To declare a different split (e.g., 90:10), you must file Form 17 with HMRC along with evidence of the actual ownership split.
For unmarried co-owners, income is automatically taxed based on actual ownership percentages. Use the ownership % field in the calculator above to model your share.