Rental income tax calculator
Work out the income tax due on your rental profit, and see exactly what Section 24 is costing you. Mortgage interest is no longer an expense you can deduct: you are taxed on the profit before it, then given a 20% credit against the bill. This calculator shows that credit as its own line, applies Scottish or rest-of-UK bands depending on where you live, and tells you how much of your interest relief the caps have pushed into future years.
Section 24 costs you £0 a year
Under the rules before 2017 your mortgage interest would have been an ordinary expense and your bill would have been £0. You are taxed at 0% on profit that funds interest relieved at 20%.
Section 24 costs you nothing
Your rental profit is taxed at 20% and your mortgage interest is relieved at 20%, so the restriction makes no difference at your income. It starts to bite the moment your total income crosses into the higher band.
Your rental profit
Mortgage interest sits below the profit line on purpose. It is not deducted. It becomes the credit on the right.
Your tax
The credit is capped at the lowest of your interest, your rental profit, and your income above the Personal Allowance.
Which bands your rental profit lands in
Rental profit stacks on top of your other income, so it is taxed from the top of your existing income upwards.
| Band | Profit in band | Tax |
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From 6 April 2027: separate property rates
The figures above use the rules in force for the tax year you picked. No 2027/28 projection is shown, because HMRC has not yet published how property income will be ordered against other income under the new rates.
This covers a private landlord letting residential property in their own name. It does not cover selling the property, holding it through a company, splitting income with a joint owner, or savings and dividend income in the band stack.
Related calculators
UK Income Tax
Basic, higher and additional rate for England, Wales & NI, with National Insurance and dividend tax.
OpenScottish Income Tax
All six Scottish bands from starter to top rate, with National Insurance and dividend tax.
OpenStamp Duty & LBTT
SDLT for England and NI, LBTT for Scotland, with first-time buyer relief and second home surcharges.
OpenHow this is calculated
- We take your rent for the year and subtract your allowable expenses: repairs, letting agent fees, insurance, ground rent, and anything else you spend wholly on running the let. That gives your rental profit.
- Mortgage interest is deliberately not subtracted. Since April 2020 finance costs are not an allowable expense, so your taxable profit is higher than your real profit. This is Section 24, and it is the reason this calculator exists.
- We add that profit to your other income. Rental profit is non-savings income, so it stacks on top of your salary or pension and is taxed at your normal bands. If you live in Scotland, that means Scottish bands.
- We work out your Personal Allowance on the combined figure, tapering it by £1 for every £2 over £100,000, then run your region bands over what is left.
- We then apply the Section 24 credit: 20% of your mortgage interest, taken off the tax bill rather than off the profit. The credit is the lower of your finance costs, your rental profit, and your income above the Personal Allowance.
- Anything the caps block is carried forward to future years rather than lost, so we show that figure separately.
- Finally we run the whole thing again under the pre-2017 rules, where interest was an ordinary expense. The difference between the two bills is what Section 24 costs you.
Frequently asked questions
How much tax do I pay on rental income?
Rental profit is added to your other income and taxed at your normal rate: 20%, 40% or 45% in England, Wales and Northern Ireland, or 19% to 48% in Scotland. There is no separate, lower rate for landlords. The complication is mortgage interest, which is not deducted from profit. You pay tax on the full profit and get a 20% credit against the bill instead.
What is Section 24 and how does it affect me?
Section 24 of the Finance (No. 2) Act 2015 removed mortgage interest as an allowable expense for private residential landlords, phased in from 2017 and fully in force since April 2020. You are now taxed on rental income before interest, then given a flat 20% tax reducer on the interest. If you are a basic-rate taxpayer it costs you nothing, because 20% is your rate anyway. If you are a higher-rate taxpayer it costs you the gap between the two rates. In the rest of the UK that is 40% charged against 20% relieved, so 20% of your mortgage interest. In Scotland it is 42% against 20%, so 22%.
Do Scottish landlords pay Scottish rates on rental income?
Yes. Rental profit is non-savings non-dividend income, which is the category the Scottish Parliament sets rates for, so Scottish taxpayers pay Scottish rates on it. What follows you is your own residence, not where the property is: a landlord living in Glasgow with a flat in Manchester pays Scottish rates on the profit. The Section 24 credit is different. It is set by reference to the UK basic rate, so it stays at 20% however high your Scottish band goes.
What changes for landlords in April 2027?
From 6 April 2027, property income gets its own rates in England, Wales and Northern Ireland: 22% basic, 42% higher and 47% additional, each 2 percentage points above the equivalent rate on earnings. The Section 24 credit rises to 22% in step. Scotland is excluded, because income tax on this type of income is devolved. Scottish landlords stay on Scottish bands with the credit still at 20%, so the gap between tax charged and relief given gets wider in Scotland than in the rest of the UK.
Which expenses can I actually claim?
Day-to-day running costs: letting agent and management fees, landlord insurance, repairs and maintenance, ground rent and service charges, council tax and utilities where you pay them, accountancy fees, and the cost of replacing domestic items such as a washing machine. You cannot claim mortgage capital repayments, improvements that go beyond repair such as an extension, or your own time. Mortgage interest is claimed, but as the Section 24 credit rather than as an expense.
What is the £1,000 property allowance?
The first £1,000 of property income each year can be taken tax-free instead of claiming real expenses. It is an either/or: claim the allowance and you give up both your actual expenses and the Section 24 credit. It wins when your costs are very low, which usually means a mortgage-free property or a small amount of occasional income. The calculator checks both routes and tells you when the allowance is the better one. Letting a room in your own home is a different scheme, Rent a Room, worth up to £7,500.
What if my rental makes a loss?
A rental loss is carried forward and set against rental profit in later years. You cannot set it against your salary or any other income, which is the key difference from a trading loss. Unused mortgage interest works the same way: anything the caps block this year carries forward indefinitely until there is profit to use it against.
If the Section 24 numbers have you rethinking whether the let still earns its keep, this is a level-headed read on holding your nerve with a long-term asset.
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This calculator is for general guidance only. It does not replace advice from a tax adviser or an accountant who handles property on your personal circumstances.
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