Landlord Tax Calculator UK 2026/27 — A 2026 Buyer's Guide

To work out your tax with a landlord tax calculator UK 2026/27, subtract your allowable running costs from your rental income to get your rental profit, add that profit to your other income, and apply your marginal rate (20%, 40% or 45%). You then subtract a tax credit worth 20% of your mortgage interest. Our free calculator does all of this in seconds.

Key takeaways

• Rental profit = rental income − allowable expenses (mortgage interest is not one of those expenses).
• Your rental profit is stacked on top of your other income and taxed at your marginal rate — 20%, 40% or 45% for 2026/27.
• Since April 2020, Section 24 means finance costs only earn a 20% basic-rate tax credit, which hits higher-rate landlords hardest.
• The 2026/27 thresholds are a £12,570 personal allowance, basic rate to £37,700 of taxable income, 40% up to £125,140 and 45% above.
• Our landlord tax calculator models profit, expenses, the Section 24 credit and your marginal rate together — try it before you file.

How does a landlord tax calculator UK 2026/27 actually work?

A good calculator mirrors exactly how HMRC assesses you. The landlord tax calculator UK 2026/27 on our site runs four steps in order:

1. Rental income — total rent received in the tax year (6 April 2026 to 5 April 2027).

2. Allowable expenses — deducted to give your rental profit.

3. Marginal rate — your rental profit is added to your other income and taxed at the rate that applies to that top slice.

4. Section 24 credit — a 20% tax reducer based on your mortgage interest is subtracted from the tax bill.

The reason you cannot simply guess is that steps 3 and 4 interact. Your rental profit can push part of your income from the basic-rate band into the higher-rate band, and the Section 24 credit is fixed at 20% regardless of your rate — so two landlords with identical rent can owe very different amounts.

What counts as allowable expenses?

Allowable expenses are the day-to-day revenue costs of running the let. Common ones include:

• Letting-agent and property-management fees
• Repairs and maintenance (mending, not improving)
• Landlord and buildings insurance
• Ground rent, service charges and council tax you pay
• Gas safety, EICR and other compliance certificates
• Accountancy fees for the rental accounts

What you cannot deduct as an expense: the capital cost of the property, improvements that add value, mortgage capital repayments, and — crucially — mortgage interest. Interest is dealt with separately through the Section 24 credit, which is where most landlords go wrong. If your total rental receipts are under £1,000 you may instead use the property allowance and claim nothing else.

Why can't I deduct my mortgage interest any more?

Because of Section 24 of the Finance (No. 2) Act 2015, phased in between 2017 and 2020 and fully in force since the 2020/21 tax year. Finance costs on residential lettings — mortgage interest, interest on loans to buy furnishings, and related fees — are no longer deducted from rental profit. Instead you get a basic-rate tax reduction worth 20% of those costs.

For a basic-rate taxpayer this is broadly neutral. For a higher or additional-rate landlord it is a real cost: you are taxed on profit calculated before interest at 40% or 45%, but only get relief on the interest at 20%. This is the single biggest reason buy-to-let tax bills rose over the last few years. Our companion explainer, Section 24 mortgage interest relief, walks through the mechanics and planning options in full.

A worked example using the 2026/27 bands

Meet a landlord with a £50,000 salary and one rental property. In 2026/27:

• Rental income: £15,000
• Allowable running costs: £3,000
• Rental profit: £15,000 − £3,000 = £12,000
• Mortgage interest (handled separately): £5,000

The £12,000 profit is added to the £50,000 salary. After the £12,570 personal allowance, the salary already uses almost the entire £37,700 basic-rate band, so nearly all of the rental profit falls into the 40% higher-rate band:

• About £270 of profit taxed at 20% = £54
• About £11,730 of profit taxed at 40% = £4,692
• Tax on rental profit before the credit = £4,746

Now apply the Section 24 credit — 20% of the £5,000 interest:

• Credit = 20% × £5,000 = £1,000
• Final tax on the rental = £4,746 − £1,000 = £3,746

Had interest still been a full deduction, the profit would have been £7,000 and the tax roughly £2,800 — so Section 24 costs this landlord close to £950. The landlord tax calculator UK 2026/27 produces this figure instantly and shows how it changes if your salary, rent or interest move.

What are the 2026/27 tax bands for landlords?

Rental profit is taxed under the same income-tax bands as your salary. For England and Northern Ireland in 2026/27:

• Personal allowance: £12,570 (tapered away £1 for every £2 of income over £100,000)
• Basic rate — 20%: on taxable income up to £37,700
• Higher rate — 40%: up to £125,140
• Additional rate — 45%: above £125,140

Scottish taxpayers have different rates and bands on non-savings income, so a Scotland-resident landlord should check the Scottish rates separately. You can see the full picture, including National Insurance and other income, in our UK calculators.

How and when do I report rental income to HMRC?

Landlords declare rental profit through Self Assessment. Register by 5 October after the tax year the income first arose, file your return online by 31 January, and pay any tax due by the same date. Keep records of rent and every expense for at least the period HMRC can enquire into your return.

Making Tax Digital for Income Tax is also changing how landlords report: it is live for those with higher combined property and self-employment income and will extend to more landlords over the coming years, requiring quarterly digital updates. Our guide to Self Assessment for landlords explains the registration and filing steps end to end.

Every return we prepare is checked and signed off by a licensed chartered accountant before it goes to HMRC — so the numbers your calculator produces are stood behind by a professional. If you would like that review, book a consultation and we will model your position properly.

Get your number, then get it checked

Start with the landlord tax calculator UK 2026/27 to see your likely bill in under a minute. Use it to test scenarios — a second property, a remortgage, a jump into the higher-rate band — before you commit. When you are ready to file accurately and claim every allowable cost, our UK team is here to help.

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Sources: GOV.UK — Work out your rental income when you let property, GOV.UK — Income Tax rates and Personal Allowances, GOV.UK — Tax-free allowances on property and trading income.

Reviewed by a Chartered Accountant (ICAEW). This article is general information, not personal tax advice; figures are for the 2026/27 tax year for England and Northern Ireland and should be confirmed for your circumstances.

Last updated: 4 August 2026

Frequently asked questions

How do I calculate tax on rental income in the UK for 2026/27?

Take your rental income, subtract allowable running costs (letting fees, repairs, insurance, ground rent) to get your rental profit. Add that profit to your other income, apply your marginal rate (20%, 40% or 45%), then subtract a tax credit worth 20% of your mortgage interest. Our landlord tax calculator UK 2026/27 at /calc/uk#rental does every step for you.

Can I still deduct my mortgage interest as a landlord?

Not as a direct expense. Since April 2020, finance costs on residential lettings are no longer deducted from your rental profit. Instead you receive a basic-rate tax reduction worth 20% of the interest. Higher and additional-rate landlords therefore get relief at only 20%, not 40% or 45%.

What expenses can a UK landlord claim in 2026/27?

Allowable revenue expenses include letting-agent and management fees, repairs and maintenance (not improvements), landlord insurance, ground rent and service charges, accountancy fees, and safety certificates. Capital costs and mortgage capital repayments are not deductible. Interest is handled separately via the 20% credit.

Do I pay tax if my rental income is under the personal allowance?

It depends on your total income, not the rent alone. Rental profit is added to your other income; if your combined taxable income is below the £12,570 personal allowance you pay no income tax on it. There is also a £1,000 property allowance that can cover very small rental receipts.

When do I have to declare rental income to HMRC?

Report rental profit through Self Assessment. You must register by 5 October following the tax year in which the income arose, file your return by 31 January online, and pay the tax due by the same date. Making Tax Digital for Income Tax is also phasing in for landlords with higher property and self-employment income.

Is a limited company more tax-efficient for landlords?

Sometimes. A company deducts full mortgage interest and pays corporation tax rather than income tax, which can suit higher-rate landlords growing a portfolio — but it adds running costs, and extracting profit is taxed again. It is a case-by-case decision; a licensed adviser should model both routes before you incorporate.