How much tax will I pay on my rental income?
See the extra income tax your rent adds to your bill, how mortgage interest relief really works, and how much to set aside each month.
How it's worked out
How landlord tax works
Your rental profit is added to your other income for the year and taxed at your income tax rates. Rental profit is rent received minus allowable running costs such as letting agent fees, repairs, insurance, ground rent and service charges.
Mortgage interest is treated differently. Since April 2020 individual landlords can't deduct it from rent. Instead you get a tax credit worth 20% of the interest, rising to 22% from April 2027. Basic-rate taxpayers usually end up in the same place, but higher-rate taxpayers pay more than they would if the interest were deductible.
From 6 April 2027, property income has its own tax rates in England and Northern Ireland: 22% basic, 42% higher and 47% additional. The personal allowance and tax bands themselves stay frozen.
Worked example
A landlord earns a £42,000 salary and receives £15,600 rent a year. Running costs are £2,400 and mortgage interest is £6,000.
- Rental profit: £15,600 − £2,400 = £13,200
- Total income £55,200, so part of the profit falls in the higher-rate band
- Tax on the profit in 2026/27: £3,626, less a mortgage interest credit of £1,200 (20% × £6,000)
- Tax due on rental income: £2,426, about £202 a month to set aside
- In 2027/28 the same figures give £2,570, because of the new 22% and 42% property rates
If the mortgage interest were fully deductible, the bill would be £1,440. The restriction costs this landlord £986 a year.
Common questions
Does this include student loan repayments?
Yes, if you choose your plan. Rental profit counts towards what you repay through Self Assessment: 9% of income over your plan's threshold (6% for a postgraduate loan). Rental profit of £2,000 or less is ignored. It's an estimate, so check the figure with your loan provider or HMRC.
Do I pay National Insurance on rental income?
Usually not. Rental income from letting property is normally taxed as property income, which doesn't attract National Insurance unless you run a property business that counts as a trade.
What is the £1,000 property allowance?
Instead of claiming your actual costs, you can deduct a flat £1,000 from your rent. It only helps if your real costs are under £1,000, and you can't also claim mortgage interest relief. The calculator checks this for you.
Can I deduct capital repayments on my mortgage?
No. Only the interest part of your mortgage payments counts, and it gets a tax credit rather than a deduction. Capital repayments aren't a cost for tax purposes.
I own the property jointly. What do I enter?
Enter your share of the rent, costs and mortgage interest. Married couples and civil partners are usually taxed 50/50 unless they've told HMRC about a different split.
Does this work for Scotland or Wales?
It uses England and Northern Ireland rates. Scotland has its own income tax bands, and Wales can set its own property rates, so results there may differ.
Estimates for individual landlords. Doesn't cover limited companies, capital gains, losses brought forward, furnished holiday lets or the High Income Child Benefit Charge. General information, not tax advice; see GOV.UK. Last reviewed October 2026.