Property hub / Rental income tax
How much tax will you pay on your rent?
Your tax on rent for 2026/27 and 2027/28, when property rates rise to 22%, 42% and 47%. Includes the mortgage interest credit at 20%, then 22%.
Checked against legislation and HMRC guidance2026/27 and 2027/28Updated 3 October 2026
The property, for a year (whole property)
Running costs: fees, repairs, insurance, certificates, accountancy. Not interest.
Your other income for the year
How it is worked out
How landlords are taxed on rent
Rental profit is added to your other income and taxed at your rates. If you own residential property personally, mortgage interest is not deducted from the profit. Instead you get a tax reduction of 20% of the interest (22% from 2027/28), limited to the lowest of the interest, the property profit and your income above your personal allowance, excluding savings and dividend income.1
The 2027 property income rates
From 6 April 2027, property income is taxed at its own rates of 22%, 42% and 47% for taxpayers in England and Northern Ireland, two points above the main rates.2 Welsh property rates depend on a Welsh rate the Senedd has not yet set; this calculator assumes the same 22%, 42% and 47%. Personal allowances are set against other income first. The mortgage interest reduction rises to 22% at the same time.3 The Scottish Parliament sets its own property rates; until it does, this calculator uses the current Scottish rates.
Joint owners
Spouses and civil partners are taxed 50:50 on jointly owned property unless they own it in unequal shares and send HMRC a Form 17 declaration, which must reach HMRC within 60 days of being signed.4 Other co-owners are taxed on their actual shares. Not covered here: the £1,000 property allowance and rent-a-room relief, which suit small amounts of rent.
Companies
A company deducts all its interest and pays corporation tax at 19% up to £50,000 of profit, rising to 25% at £250,000, with marginal relief between. Taking the profit out as dividends is taxed again.5
Common questions
What is section 24?
Section 24 of the Finance (No. 2) Act 2015 introduced the restriction on finance costs for individual landlords of residential property. It is now in sections 272A to 274C of the Income Tax (Trading and Other Income) Act 2005. Interest is not deducted; a basic rate tax reduction is given instead.
What happens to interest relief I cannot use this year?
If the reduction is limited by your property profit or your income, the unused interest is carried forward and can be used in later years.
Can I deduct the cost of furnishing a let property?
Not the first furniture and appliances, which are capital. Replacing them later is deductible, at the cost of a like-for-like item.
When do landlords have to use Making Tax Digital?
From 6 April 2026 if your property and self-employed income was over £50,000 on your 2024/25 return, from 6 April 2027 if over £30,000 on your 2025/26 return, and from 6 April 2028 if over £20,000 on your 2026/27 return. It is gross income before expenses, and only your share of joint property counts.
Sources (5)
- Income Tax (Trading and Other Income) Act 2005, ss 272A, 274A and 274AA.
- Finance Act 2026, ss 6 and 7; Income Tax Act 2007, s 11CA.
- FA 2026, Sch 1.
- ITA 2007, ss 836 and 837.
- Corporation Tax Act 2010, ss 18A to 18D; HMRC, 'Rates and allowances: Corporation Tax' (GOV.UK).
Paying more than half your real profit in tax?
Joint ownership, Form 17, the way properties are financed and the right structure can all change the answer.