Landlord & rental income tax calculator 2026/27
See the Income Tax on your rental income after mortgage interest relief, alongside your salary and your share of a jointly owned property — and what the new 22% property rate will cost you from April 2027.
How tax on rental income is worked out
- Rental profit: your rent minus allowable expenses (repairs, letting agent fees, insurance, ground rent, service charges…) — or minus the £1,000 property allowance instead.
- Added to your other income: the profit sits on top of your salary, pension or self-employed profit, so it is taxed at your highest rate. Above £100,000 of income, you also lose £1 of Personal Allowance for every £2.
- Mortgage interest is not deducted (the “Section 24” rule for residential landlords). Instead you get a tax reduction of 20% of the lowest of: your finance costs, your rental profit, and your income above the Personal Allowance. Interest you could not use is carried forward to the next year.
What changes on 6 April 2027
The Finance Act 2026 creates separate Income Tax rates for property income from the 2027 to 2028 tax year:
| Band (taxable income) | 2026/27 | From 6 April 2027 |
|---|---|---|
| Basic rate (up to £37,700) | 20% | 22% |
| Higher rate (up to £125,140) | 40% | 42% |
| Additional rate (above £125,140) | 45% | 47% |
| Mortgage interest tax reduction | 20% | 22% |
- Your Personal Allowance is used against your salary, pension or self-employed profit first, then against rent: rent is taxed on top of your other income.
- The new rates apply in England, Wales and Northern Ireland. If you live in Scotland, your rental profit stays taxed at Scottish rates, which the Scottish Parliament sets each year — the 2027/28 rates are not known yet, so the calculator only shows 2026/27 for Scotland.
- The Personal Allowance (£12,570) and the basic rate band (£37,700) are frozen until April 2031. The property allowance and Rent a Room scheme are unchanged.
Property allowance or actual expenses?
Each person can deduct a flat £1,000 property allowance from their share of gross rent instead of actual expenses. If your rent is £1,000 or less, it is tax-free and you do not need to tell HMRC. But you cannot use the allowance and also claim the mortgage interest tax reduction — so with a mortgage, actual expenses usually win. The calculator compares both and picks the cheaper one.
Jointly owned property
You pay tax on your share. Married couples and civil partners who live together are usually taxed 50:50, even if they own the property in unequal shares, unless they own and receive the income in unequal shares and declare it to HMRC on Form 17. Other joint owners are usually taxed on their share of the property, unless they agree a different split. Each owner gets their own £1,000 property allowance.
Making Tax Digital for landlords
Making Tax Digital for Income Tax looks at your qualifying income: your share of rent before expenses, plus any self-employed turnover. Above £50,000 in 2024/25, it applies from 6 April 2026; above £30,000 in 2025/26, from 6 April 2027; above £20,000 in 2026/27, from 6 April 2028. You then keep digital records and send quarterly updates through HMRC-recognised software. Read MTD for landlords, find free MTD software or compare all software that handles property income.
When does Making Tax Digital start for you?
Two minutes: your start date, a dated plan for your calendar and software that handles rental income.
Questions landlords ask
Is mortgage interest tax deductible for landlords?
Not for individual landlords of residential property. Since April 2020 you get a tax reduction instead: 20% of your finance costs in 2026/27, rising to 22% from April 2027 — but limited by your rental profit and your income above the Personal Allowance. Limited companies can still deduct interest as a cost; this calculator is for individuals.
How much tax will I pay on £10,000 of rental income?
With no mortgage and the £1,000 property allowance, your rental profit is £9,000. As a basic-rate taxpayer you pay £1,800 in 2026/27 (£1,980 from April 2027); as a higher-rate taxpayer, £3,600 (£3,780 from April 2027). Enter your own figures above for an exact estimate.
Do I pay National Insurance on rental income?
Usually not: rental income is not subject to National Insurance. Class 4 National Insurance only applies to self-employed profits — the calculator adds it if you enter self-employed income.
When do I pay the tax?
Through Self Assessment, by 31 January after the end of the tax year — 31 January 2028 for 2026/27. If your bill is £1,000 or more and less than 80% of your tax was taken at source, you also make two payments on account towards the next year, on 31 January and 31 July.
Does my rental income count towards Making Tax Digital?
Yes: your share of gross rent counts, before any expenses or mortgage interest. A landlord with £2,500 a month of rent has £30,000 of qualifying income — just at the threshold. MTD applies when qualifying income is more than £30,000 in 2025/26.
Sources: GOV.UK — Income Tax rates and Personal Allowances, Scottish Income Tax 2026 to 2027, property and trading allowances, working out your rental income (joint ownership), tax relief for residential landlords, property income rates technical note, payments on account, MTD qualifying income; legislation.gov.uk — Finance Act 2026, s.6, s.7 and Sch. 1, ITTOIA 2005 s.274AA. Checked 9 October 2026.