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Landlord Tax Calculator
See exactly how much income tax you pay on rental income — and how Section 24 affects your bill versus the old rules.
Your Property Income
£12,000
£2,000
£6,000
Your Other Income
£30,000
OLD RULES (pre-2017)
£800
Tax on rental income
Net profit: £3,200
SECTION 24 (now)
£800
Tax on rental income
Net profit: £3,200
Section 24 does not affect you
At the basic rate (20%) the credit exactly offsets — no extra tax.
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How is Rental Income Taxed in the UK?
Rental income is added to your other income (employment, self-employment, pension) and taxed at your marginal rate — 20%, 40%, or 45%. The first £12,570 of total income is covered by your Personal Allowance and taxed at 0%.
Allowable expenses (repairs, letting agent fees, insurance, accounting) reduce your taxable rental profit. Mortgage interest no longer reduces taxable profit under Section 24 — instead you receive a 20% tax credit on the interest paid.
If you pay 40% or 45% income tax, Section 24 means you're taxed on more income than you actually receive in cash — you may owe tax even when your rental property barely breaks even after mortgage payments.
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Frequently Asked Questions
How is rental income taxed in the UK?
Rental income is added to your other income (salary, pension, self-employment) and taxed at your marginal rate — 20%, 40%, or 45%. The first £12,570 is covered by your Personal Allowance and taxed at 0%. You can deduct allowable expenses such as repairs, insurance, letting agent fees, and accountancy costs.
What is Section 24 and how does it affect landlords?
Section 24 (Finance Act 2015) restricts mortgage interest relief for individual landlords. Since April 2020, you cannot deduct mortgage interest as an expense. Instead, you receive a 20% tax credit on the interest paid. This significantly increases tax bills for higher and additional rate (40%/45%) taxpayers — they are taxed on gross rental income as if they had no mortgage.
Can I deduct mortgage interest from rental income?
No — not for individual landlords. Under Section 24, mortgage interest is no longer an allowable expense. You receive a 20% tax credit instead. This means basic rate (20%) taxpayers are unaffected, but higher rate (40%) and additional rate (45%) taxpayers pay significantly more tax than before 2017.
What expenses can I deduct from rental income?
Allowable expenses include: letting agent fees, property repairs and maintenance, buildings and contents insurance, accountancy fees, ground rent and service charges (leasehold), advertising costs, and professional subscriptions. Capital improvements (extensions, new kitchens) are NOT deductible as revenue expenses — they reduce your Capital Gains Tax bill when you sell.
Does Section 24 affect basic rate (20%) taxpayers?
No — for basic rate taxpayers, Section 24 makes no difference. The 20% tax credit exactly offsets the 20% tax on the interest. The impact is felt only by higher rate (40%) and additional rate (45%) taxpayers, who previously deducted interest at their full marginal rate but now only receive a 20% credit.
Disclaimer: This content is for educational purposes only and does not constitute tax advice. Tax rules are complex, change frequently, and depend on individual circumstances. Always consult a qualified accountant or tax advisor (ACCA, ICAEW, or CIOT qualified) before making tax-related decisions.
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