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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.
In the UK, rental income earned from letting out property is subject to Income Tax. Landlords must declare all rental profits—this includes rent received and other payments from tenants (such as for utilities or repairs), minus allowable expenses. You only pay tax on your taxable profit, not the total rent collected.
If your rental income exceeds £1,000 a year, or if you choose not to use the £1,000 property allowance, you must file a Self Assessment tax return. Additional taxes may apply when selling a rental property, including Capital Gains Tax (CGT).
• Taxable Profit = (Rental Income + Other Property Payments) − Allowable Expenses
1. Enter your monthly rental income and an estimate of your monthly expenses. This will calculate your
2. Add in your PAYE salary and other taxable income (such as dividends) this will help determine your rental income tax bracket. If rental income is your only income, leave it blank.
3. Add your mortgage interest. Whilst the interest is not deductible under Section 24, you do receive a 20% tax relief.
• Tax Payable = (Taxable Profit × Income Tax Rate) − Mortgage Interest Tax Credit
Rental profits are added to your other income (such as salary) and taxed according to your personal Income Tax band (20%, 40%, or 45%).
Allowable expenses can include mortgage interest (subject to the mortgage interest tax credit rules), repairs and maintenance, letting agent fees, insurance, and property management costs.
If you own multiple properties, income and expenses from all of them are grouped together.
Note: How landlords report rental income for tax is changing. Read about the MTD rules here.
If you rent out a furnished room in your own main residence, you may qualify for the Rent-a-Room Scheme, which allows you to earn up to £7,500 per year tax-free. This applies whether you rent to a lodger, offer short-term stays, or provide bed-and-breakfast accommodation.
If you share the income with someone else (such as a joint homeowner), the allowance is split, giving each person £3,750 tax-free.
You don’t need to deduct expenses when using this scheme—if your rental income is below the threshold, it’s automatically tax-free.
If you earn more, you can choose to opt in and pay tax only on the amount above £7,500, or opt out and instead deduct allowable expenses in the standard way.
For landlords who rent out property not in their main residence—such as buy-to-let or investment properties—the government offers a £1,000 Property Allowance. This allows you to earn up to £1,000 of gross rental income tax-free without needing to keep records of expenses.
You can use the £1,000 property allowance if:
• Your rental income is less than £1,000 (making it completely tax-free), or
• You want to deduct the flat £1,000 instead of itemising your actual expenses.
However, you cannot use this allowance if:
• You’re claiming any other expenses for the property, or
• You rent through a company or partnership.
This allowance is particularly useful for small-scale or casual landlords, or those with very low annual rental income.
Yes. Rental income is subject to Income Tax. You pay tax on your profit (rental income minus allowable expenses), not on the total rent collected.
Rental income includes the rent you receive, as well as payments from tenants for services such as cleaning, gardening, utility bills, or repairs.
Allowable expenses include: Repairs and maintenance, Letting agent fees, Landlord insurance, Utility bills (if you pay them), Property management costs, Mortgage interest (relief given as a 20% tax credit).
Read the full guide to allowable expenses for landlords.
Your rental profit is added to your other income (like your salary) and taxed according to your personal Income Tax band: 20%, 40%, or 45%.
You must file a Self-Assessment return if:
∙ Your net rental income is more than £1,000 per year,
or
∙ You choose not to use the £1,000 property allowance.
Note that the Self-Assessment rules for landlords and self-employed individuals are changing. From April 2026 landlords earning over £50,000 in qualifying income will be required to adhere to the new MTD rules. This means digital record-keeping and quarterly updates using an HMRC-recognised software (like Landlord Studio).
All rental income and expenses from your UK properties are pooled together. You report the combined profit or loss on your tax return.
Losses can usually be carried forward and offset against future rental profits from the same property business.
Yes, if you sell a rental property for more than you paid for it, you may owe Capital Gains Tax (CGT). Rates are typically 18% or 24% depending on your tax band and the type of asset.
You can no longer deduct mortgage interest from rental income. Instead, you receive a 20% tax credit based on your mortgage interest payments which you can apply for when you submit your Self-Assessment.
