Tool · England and Wales · 2026/27 tax year
Rental income tax calculator
Estimate how much income tax your rental profit adds this tax year, and what the mortgage interest restriction costs you compared with a full deduction.
Figures checked against GOV.UK and HMRC guidance.
Your estimate, 2026/27
- Rental profit for tax (interest not deducted)
- Extra income tax from that profit
- Less finance cost tax reduction
- Estimated tax on your rental
- Your cash profit after interest
- Extra tax caused by the interest restriction
- Finance costs carried forward
This is an estimate, not advice. It ignores the items listed under limitations. Ask us to check your figures.
Wondering whether a company would cost less? See portfolio planning and incorporation. Want the return done for you? See landlord tax returns.
How the estimate is worked out
- Rental profit = rent less allowable costs. Mortgage interest is not deducted, because individual landlords cannot deduct it.
- Income tax is worked out on your other income alone, then on your other income plus rental profit. The difference is the extra tax from the rental.
- The tax reduction is 20% of the lowest of: your finance costs, your rental profit, and your total income above the personal allowance. It cannot exceed your tax bill. HMRC method
- For comparison, the tax is recalculated as if interest were fully deductible. The difference is what the restriction costs you.
Rates and allowances used
| Item (2026/27, England and Wales) | Figure |
|---|---|
| Personal allowance | £12,570 |
| Personal allowance reduced by £1 for every £2 of income over | £100,000 |
| Basic rate band (taxable income) | £37,700 at 20% |
| Higher rate | 40% |
| Additional rate, on taxable income over | £125,140 at 45% |
| Finance cost tax reduction | 20% |
Assumptions and limitations
- You are an individual taxed in England or Wales. The estimator does not cover Scottish income tax rates.
- Residential property let on normal terms, owned personally. Enter your own share if jointly owned.
- No savings interest, dividends, pension contributions, Gift Aid, student loan or High Income Child Benefit Charge.
- No losses or unused finance costs brought forward.
- It does not cover the 2027/28 property income rates of 22% (property basic rate), 42% (property higher rate) and 47% (property additional rate); those apply from 6 April 2027 and the estimator will be updated before then. HM Treasury
- It is an estimate for planning, not a tax return and not personal advice.
Read more: can landlords claim mortgage interest? and how rental income is taxed.
Official sources
- Income Tax rates and Personal Allowances GOV.UK
- Restricting finance cost relief for individual landlords: how it's worked out, including case studies HMRC
- Change to tax rates for property, savings and dividend income: technical note (26 November 2025) HM Treasury / HMRC
Figures were checked against these sources on . Tax rules change: check the source or ask us before acting.