Rental Income Tax Calculator
Landlord earning rental income from a tenant in your home or a buy-to-let property? Quickly calculate how much you can expect to pay in rental income tax.
How to manually calculate tax on your rental income
Taxable profit is your rental income minus allowable expenses, taxed at your income tax rate. Mortgage interest is not an allowable expense - it comes back separately as a 20% credit against the bill.
Work out your taxable profit
Take allowable expenses off your rental income. Mortgage interest is not one of them.
Apply your tax rate
Rental profit stacks on top of your other income, so it's taxed at your highest rate.
Take off the mortgage interest credit
You get 20% of your mortgage interest back against the bill - which is why higher-rate landlords often owe more than they expect.
Worked example
A basic-rate landlord earns £24,000 in rent, with £6,000 of allowable expenses and £7,000 of mortgage interest.
Taxable profit = £24,000 − £6,000 = £18,000
Tax owed = (£18,000 × 20%) − (£7,000 × 20%) = £3,600 − £1,400 = £2,200
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Calculating tax on rental income
How rental income is taxed in the UK
You only pay tax on your taxable profit, not the total rent you collect - rent received and other tenant payments, minus allowable expenses.
If your rental income is over £1,000 a year you'll need to file a Self Assessment return.
Rent a Room relief (£7,500 tax-free)
Let a furnished room in your own home and Rent a Room relief can make the first £7,500 a year tax free - £3,750 each if you share the income.
Below the threshold it's automatic. Above it, you choose between paying tax on the excess or deducting expenses as normal.
Why should you use our rental income tax calculator?
- Applies the Section 24 mortgage interest credit correctly
- Compares the £1,000 property allowance against claiming real expenses
- Handles Rent a Room relief if you let a room in your own home
- Covers Scottish tax bands as well as England, Wales and Northern Ireland
- Built by a platform landlords already trust for Self Assessment and MTD
