UK Rental Income Tax Calculator

Your estimated rental tax

Income Tax on rental income is worked out by comparing your total Income Tax with and without your taxable property profit, using your combined Personal Allowance and tax bands, not by applying a flat rate to your rental income directly.

• Additional Income Tax on rental income
• Rental income after tax

How rental income is taxed

Rental profit is added to your other taxable non-savings, non-dividend income and taxed under the same Income Tax bands, using one Personal Allowance for your combined income. There is no separate flat rate for rental income.

Rental profit versus rental income

Gross rental income is the total rent you receive. Rental profit is what is left after deducting allowable expenses (or the Property Allowance). Income Tax is calculated on your taxable property profit, not your gross rental income.

Allowable expenses

Allowable expenses are day-to-day, non-finance costs incurred wholly for renting out the property, such as letting agent fees, insurance, repairs and maintenance, and other running costs. Mortgage interest and other finance costs are not included here; they are treated separately, described below.

The £1,000 Property Allowance

The Property Allowance lets you deduct £1,000 from your gross rental income instead of your actual expenses. You cannot use both; if you choose the Property Allowance, this calculator does not also apply brought-forward losses or finance-cost relief, because these cannot be combined with the allowance for the same calculation.

Mortgage interest and residential finance-cost relief

For individual landlords, mortgage interest and other qualifying residential finance costs are not deducted from rental profit. Instead, you get a tax reduction, generally worth the basic rate (20%) of the lower of your finance costs, your property profit, or your income above the Personal Allowance. If the reduction cannot be fully used because of these limits, the unused finance costs can normally be carried forward to a future year.

Property losses

If your allowable expenses are more than your rental income, you make a property loss for the year. This calculator does not offset a property loss against your salary or other general income; instead, it is carried forward and can be used against property profit in a future year.

How salary and other income affect rental tax

Your Personal Allowance and tax bands are shared across your combined income. If your other income already uses most of your Personal Allowance and basic rate band, more of your rental profit is likely to be taxed at a higher rate. If your combined income, including rental profit, goes above £100,000, your Personal Allowance is gradually reduced, which can increase the tax attributable to your rental income.

Scottish taxpayers

Scottish taxpayers use Scottish Income Tax bands for their combined non-savings, non-dividend income, including rental profit. The residential finance-cost tax reduction is still given at the UK basic rate of 20%, not a Scottish rate.

Joint ownership

If you jointly own the property, enter only your own share of the rental income, expenses and finance costs, not the full amounts for the property. This calculator does not work out ownership shares for you.

What this calculator does not cover

• The Rent a Room Scheme
• Limited-company property tax
• Property partnerships
• Non-resident landlord withholding
• Overseas property
• Commercial property finance-cost treatment
• Capital Gains Tax and Stamp Duty Land Tax
• National Insurance (rental income is not subject to National Insurance)
• Payments on Account and Self Assessment balancing payments
• Savings interest and dividend income

This is an estimate for general guidance, not a Self Assessment calculation. Your actual tax position can differ based on your full circumstances.