Rental Tax Calculator
2025–2026 — Calculate tax on your buy-to-let property income, including mortgage interest relief
| Description | Annual | Monthly |
|---|---|---|
| Employment | ||
| Gross Salary & Other Income | – | – |
| Pension Contribution | – | – |
| Net Employment Income | – | – |
| Property | ||
| Gross Rent Received | – | – |
| Allowable Expenses | – | – |
| Net Rental Profit | – | – |
| Tax Calculation | ||
| Combined Taxable Income | – | – |
| Income Tax (Combined, before relief) | – | – |
| Mortgage Interest Relief 20% credit | – | – |
| Total Income Tax (after relief) | – | – |
| Income Tax on Employment Alone (reference) | – | – |
| Tax Attributable to Rental Total tax after relief − employment tax | – | – |
UK Rental Income Tax Guide 2025–2026
How buy-to-let income is taxed, what you can deduct, and how to report it
Rental income is added to your other income and taxed at your marginal rate. Your personal allowance covers the first £12,570 of all income combined. Only allowable expenses (not mortgage capital) can be deducted from rental profits.
Allowable Expenses
HMRC allows deduction of revenue expenses from rental income:
- Property maintenance & repairs (not improvements)
- Letting agent and management fees
- Landlord insurance premiums
- Utility bills if paid by you
- Advertising and direct property costs
Capital improvements and personal expenses are not deductible.
Mortgage Interest Relief
Since April 2020, mortgage interest cannot be deducted from rental income directly. Instead, you receive a 20% tax credit (Section 24).
Example — higher-rate taxpayer:
- Mortgage interest: £10,000/yr
- Old relief (40%): £4,000 saved
- New credit (20%): £2,000 only
- £2,000 more tax vs pre-2020
Pension & Rental Income
Pension contributions can only be made from earned income — employment salary or self-employment profits.
Rental income is classified as investment income by HMRC and does not count towards your pension annual allowance.
Reporting to HMRC
You must complete a Self Assessment tax return if your rental profits exceed £1,000 in a tax year. Register by 5 October following the relevant tax year.
- Rental profits are reported on the SA105 supplementary page
- Keep records for at least 5 years after the filing deadline
- Rental losses can be carried forward to offset future rental profits
Property Allowance
If your total rental income is under £1,000 you may qualify for the property allowance — no need to report or pay tax. If between £1,000 and your actual profit, you can elect to use the allowance instead of actual expenses.
Figures reflect HMRC rates for 2025–2026. For guidance only — not financial or tax advice.