Rental income tax calculator, 2026/27

How this is calculated

Rental profit is added to your other income and taxed through the normal income tax bands for 2026/27: 20% basic rate, 40% higher rate above the higher rate threshold, and 45% additional rate above £125,140. There is no separate rate for property income, it simply stacks on top of salary, dividends or pension income you already have.

Everyone with property income can deduct a flat £1,000 property allowance instead of actual expenses if that produces a better result, which mainly helps landlords with very low costs. Where actual allowable expenses, letting agent fees, insurance, repairs and services provided, exceed £1,000, deducting them properly usually gives a lower taxable figure.

This calculator compares your rental income against both the property allowance and your stated expenses, taxes the resulting profit at your marginal rate, and reports the extra tax that letting has added to your bill this year.

Personally held property versus other structures

This calculator is aimed squarely at landlords who own property in their own name and are taxed on rental profit through Self Assessment. It deliberately does not restrict mortgage interest relief to a basic rate tax credit, because that restriction is covered separately under Section 24.

If you are comparing personal ownership against holding property through a limited company, remember that a company pays corporation tax on rental profit instead, and you would then face a further personal tax charge on extracting profit as salary or dividends.

Keeping records for Self Assessment

Landlords need to declare gross rent and allowable expenses on the UK property pages of their Self Assessment return each year, keeping receipts for repairs, agent statements, and mortgage interest certificates.

Where more than one rental property is owned, income and expenses are usually pooled together as a single UK property business, rather than reported property by property, which can make loss relief between properties more flexible.

How is rental income taxed differently from employment income?

It is not a separate tax; rental profit is simply added to your other taxable income for the year and taxed at whatever marginal rate that combined total reaches, using the normal income tax bands.

Should I claim the £1,000 property allowance or deduct expenses?

Claim whichever gives the lower taxable figure. If your genuine allowable costs are below £1,000 the flat allowance usually wins; above that, deducting actual expenses is normally better.

Does this calculator restrict mortgage interest relief?

No. This tool looks at gross rental income taxed at your marginal rate. Mortgage interest relief restricted to a 20% tax credit is covered by the separate Section 24 mortgage interest relief calculator.

Do I need to register for Self Assessment for rental income?

Generally yes, once gross rental income exceeds £1,000 a year, you should register for Self Assessment and report the property income, even if the resulting tax bill is small.