Landlord tax calculator: rental income, expenses and mortgage interest relief

Individual landlords pay income tax on rental profit, which is rent minus allowable costs, added to other income. Mortgage interest is not deducted. You get a tax reduction of 20% of the interest instead, rising to 22% in April 2027, when property income rates go up to 22%, 42% and 47%. Enter your own figures below to see your estimated bill.

What counts as rental income

• Rent received from tenants.
• Service charges and ground rent you recharge to tenants.
• Parking, garages and storage let separately.
• Insurance payouts for lost rent, such as rent guarantee claims.
• Other property income: laundry or vending income, tenant payments for damage, and lease premiums.

What a landlord can claim

• Rent, rates, insurance and ground rent, including buildings and contents insurance.
• Repairs and maintenance: fixing what is broken, redecorating, and like-for-like replacements. Not improvements.
• Agent, legal and accountancy fees: letting and management fees, tenancy agreements and accounts.
• Services and bills you pay: cleaning, gardening, utilities and council tax during voids.
• Replacing furniture and appliances: the like-for-like cost of items you supply, not the first fit-out.
• Other costs of letting: advertising, gas and electrical safety certificates, phone and software for the lettings, referencing.
• Travel: mileage at 55p a mile for the first 10,000 miles and 25p after, for trips to manage or repair the property.

What you cannot claim

The purchase price and stamp duty, improvements that add something new (an extension, first-time double glazing, central heating where there was none), the capital part of mortgage repayments, your own time, and fines or penalties.

How mortgage interest relief works

For homes you own personally, mortgage interest is not deducted from your rent. Instead you get a tax reduction worth 20% of the interest in 2026/27 and 22% in 2027/28. The reduction is limited to the lowest of your interest, your rental profit and your income above the personal allowance. Any unused interest carries forward.

With no other income, only £4,430 of the profit is above the personal allowance, so the reduction is capped and £3,570 of interest carries forward.

The £1,000 property allowance

You can deduct £1,000 from your gross rent instead of claiming your actual costs. It only helps when your costs are below £1,000. If you use it you cannot also claim your costs, the mortgage interest reduction or replacement of domestic items relief. The calculator tests both routes and shows the lower tax.

What changes in April 2027

From 6 April 2027, property income in England, Wales and Northern Ireland is taxed at separate rates, two points higher than the normal rates. The mortgage interest reduction rises to 22% in step.

On the default example in the calculator (£18,000 rent, £5,100 costs, £6,000 mortgage interest, £35,000 other income) the estimated tax goes from £1,380 in 2026/27 to £1,518 in 2027/28. The bands themselves stay frozen.

Payments on account and Making Tax Digital

A tax bill over £1,000 usually means payments on account: next year's tax is paid in two instalments, in January and July, on top of the balance. If your gross property and self-employment income passes £50,000 from April 2026, £30,000 from April 2027 or £20,000 from April 2028, you must keep digital records and send quarterly updates.

What the calculator leaves out

• It is for homes let on ordinary tenancies by individuals. It is not for holiday lets, Rent a Room, commercial property or properties held in a company.
• Capital gains tax when you sell, stamp duty, losses brought forward and the High Income Child Benefit Charge.
• Dividends and savings interest. Other income is treated as ordinary income at normal rates.
• Scottish income tax bands. 2027/28 figures use today's frozen bands.

Sources: GOV.UK: working out your rental income · GOV.UK: income tax rates. Property income rates from April 2027 are set by Finance Act 2026. General information, not personal tax advice.

See also the limited company vs sole trader calculator, or browse all free tax calculators.