Rental Income Tax Calculator
Estimate tax on a supported positive residential letting profit. Mortgage finance costs are treated as a restricted tax reducer, not as operating expenses.
Rule year: 2026/27 · GBP · Sources checked
Estimated Income Tax increase from entered letting
Individual positive-profit ordinary residential letting, current eligible costs and other non-savings income only. No company, trust, property allowance, carried losses/costs, foreign apportionment, relief elections, dividends, savings, pension/Gift Aid or full Self Assessment return. Expense eligibility and ownership share already established.
For informational purposes only. This estimate is not financial advice, a tax return, a payroll calculation or a lender decision. See the supported circumstances and exclusions below.
How this calculator works
For an individual residential landlord, restricted finance costs are not deducted from rental profit like ordinary operating expenses. This model adds established positive profit to other non-savings income, calculates regional Income Tax, then applies a basic-rate reducer. Its base is limited by finance costs, property profit and adjusted total income above Personal Allowance; the reducer cannot exceed total Income Tax. Comparing with the other-income-only baseline shows the tax change attributable to this scenario. Unused finance costs require separate carry-forward checks.
Formula and rules
Property profit = rent − established non-finance expenses. Finance reducer = min(total Income Tax, 20% × min(eligible finance costs, property profit, adjusted total income above allowance)). Tax change = combined tax after reducer − baseline tax.
Assumptions and limitations
Individual positive-profit ordinary residential letting, current eligible costs and other non-savings income only. No company, trust, property allowance, carried losses/costs, foreign apportionment, relief elections, dividends, savings, pension/Gift Aid or full Self Assessment return. Expense eligibility and ownership share already established.
Worked example
In England, £20,000 rent less £5,000 operating expenses gives £15,000 profit. With £40,000 other income, the added tax before finance relief is £3,946. £4,000 eligible finance costs give an £800 reducer, leaving £3,146 illustrated tax increase.
- Estimated Income Tax increase from entered letting
- £3,146.00
- Property profit before finance-cost reducer
- £15,000.00
- Residential finance-cost tax reduction
- £800.00
- Total Income Tax after reducer
- £8,632.00
Official sources and review
Reviewed against the sources below on 2026-10-06. Rates are held in versioned rule modules. Versioned rules, official source review and year-specific calculation tests.
- HMRC: residential landlord finance-cost relief ↗
20% reducer limited by finance costs, property profit and adjusted total income; relief cannot create a refund.
- GOV.UK: Income Tax rates and Personal Allowances ↗
2026/27 allowance £12,570, taper above £100,000, and income bands.
- HMRC: Rates and thresholds 2026 to 2027 ↗
Regional PAYE bands, Category A NI, student-loan plans and current minimum wage.
Common questions
Can I deduct mortgage interest as an operating expense?
For the supported individual residential case, restricted finance costs use a tax reducer. Enter them separately to avoid deducting them twice.
Does this calculate a company landlord’s tax?
No. Company taxation and other entity rules differ from individual Income Tax.
What if expenses exceed rent?
This page supports positive profit only. Property loss carry-forward treatment and other adjustments need a separate assessment.