Rental Income Tax Calculator (UK, 2026/27)
Salary + rent combined, Section 24 done properly, Scottish bands included — on verified 2026/27 rates, with a preview of the 2027 property rates.
Your rental tax, estimated
Estimate only — ignores other reliefs, losses brought forward and payments on account. Not advice.
How this calculator works
Rental profit doesn’t have its own tax rate in 2026/27 — it stacks on top of your other income and gets taxed at your marginal band: 20%, 40% or 45% in England, Wales and Northern Ireland, or Scotland’s six bands from 19% to 48%. The tool computes your tax with and without the rental slice; the difference is what the rent really costs you — the honest number most calculators skip.
Two rules most people get wrong are built in:
- Mortgage interest is not an expense (Section 24). Since 2020 you deduct zero finance costs from rental income; instead you get a 20% tax credit on them, capped at the lowest of your finance costs, your property profit, and your adjusted total income. For a higher-rate landlord that cap is the whole story — the full mechanics are here.
- The £1,000 property allowance is an either/or. You can take £1,000 off gross rent instead of claiming any expenses or the finance credit. Good for tiny lets, terrible for mortgaged ones — the tool compares both routes automatically and tells you which it used.
Worked example — 2026/27
Salary £45,000; rent £12,000; expenses £2,000; mortgage interest £6,000 (England):
- Rental profit: £12,000 − £2,000 = £10,000 (interest not deductible)
- Stacked on £45,000, the first £5,270 of profit fills the basic band at 20%, the remaining £4,730 is taxed at 40% — £1,054 + £1,892 = £2,946
- Section 24 credit: 20% × £6,000 = −£1,200
- Tax on the rental: £1,746 — an effective 17.5% on the £10,000 profit, but notice the mechanism: the same landlord before 2017 would have paid tax on £4,000, not £10,000. That is Section 24.
What changed at the November 2025 Budget
For 2026/27: nothing on property rates — and the rumoured National Insurance on rents was explicitly dropped. From 6 April 2027, England & NI property income moves to its own rates of 22% / 42% / 47% with the Section 24 credit rising to 22%. Flip the toggle above to preview your 2027/28 position; the sourced timeline is here.
gov.uk income-tax rates · gov.uk “Changes to tax rates for property, savings and dividend income” (read verbatim) · gov.scot 2026/27 factsheet · ITTOIA s274A. Checked 29 Aug 2026.
Asked constantly
There's no flat rate: rental profit is added to your other income and taxed at your marginal band — 20/40/45% in England, Wales & NI, 19–48% in Scotland. A £10,000 profit costs a basic-rate taxpayer about £2,000 and a higher-rate taxpayer £4,000 before the Section 24 credit trims it. The calculator above shows the exact split for your numbers.
No — and this catches thousands of new landlords. Capital repayments were never deductible, and since April 2020 interest isn't either: you receive a 20% tax credit on finance costs instead (Section 24). A 40% taxpayer effectively gets half the relief they'd expect. Limited-company landlords still deduct interest in full, which is why incorporation keeps coming up — with its own costs.
No. Rental income is not subject to Class 2 or Class 4 NIC, and the widely-rumoured Budget-2025 NIC on rents was explicitly not introduced (confirmed in the Budget analyses). The Budget's real property change is the separate 22/42/47% rates arriving April 2027.
The £1,000 property allowance makes it tax-free — you don't even need to report it. Above £1,000 you choose: deduct the flat £1,000, or claim actual expenses plus the finance-cost credit. The calculator compares both routes automatically.
The property's location doesn't matter — YOUR tax residence does. A Scottish-resident landlord pays Scottish bands on rental profit wherever the property sits; an English resident with a Glasgow flat pays rUK rates. Pick your residence in the toggle, not the property's postcode.