Free One Tax Tool UK for 2025–2026. Estimates are for guidance only and not financial advice—please consult a professional.

UK Buy-to-Let Rental Income Tax Calculator 2025-2026

Buy-to-Let Rental Tax Calculator

Rental Tax Breakdown

Total Non-Rental Income
Gross Salary + Other Income − Pension Contributions from Employment
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Tax on Non-Rental Income
Income tax owed on salary and other non-rental income
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Net Rental Income
Annual Rent − Property Expenses − Pension Contributions from Rental Income
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Combined Gross Income
Total Non-Rental Income + Net Rental Income
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Tax on Combined Gross Income (Before Relief)
Income tax calculated before applying mortgage relief
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Mortgage Interest Relief (20%)
20% tax relief on eligible mortgage interest payments
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Total Tax on Combined Income (After Relief)
Final total income tax payable after subtracting mortgage relief
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Tax Attributable to Rental Income
Total Tax on Combined Income − Tax on Non-Rental Income
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Your 2025–2026 UK Guide to Rental Income Tax

Renting out property in the UK can be a great source of income, but it comes with tax obligations. This guide explains how rental income tax works, what expenses you can claim, and how to calculate your tax liability for the 2025–2026 tax year.

How Rental Income Tax is Calculated

Your rental income tax depends on three key factors:

  • How much you earn from rent: This includes all rental income received.
  • Your expenses: Allowable expenses can reduce your taxable profit.
  • Your other income: Your total income (e.g., salary, self-employment) determines your tax rate.
Allowable Expenses

HMRC allows landlords to deduct certain expenses from their rental income to calculate taxable profit.

  • Property maintenance and repairs (not improvements)
  • Utility bills, council tax, and insurance
  • Letting agent and management fees
  • Legal fees for short-term leases
  • Direct costs like advertising and phone calls

You cannot claim for capital improvements (e.g., extensions) or personal expenses.

Mortgage Interest Relief

Since April 2020, landlords can no longer deduct mortgage interest from rental income. Instead, you receive a 20% tax credit on your finance costs.

Example:

  • Annual mortgage interest: £14,400
  • Tax credit: £14,400 × 20% = £2,880
This change primarily affects higher and additional-rate taxpayers.
Handling Rental Losses

If your allowable expenses exceed your rental income, you've made a loss. Losses can be carried forward to offset future rental profits.

However, rental losses cannot be offset against other types of income like your salary.

Keep detailed records of your rental losses for at least 5 years.

Record Keeping Requirements

Landlords must keep accurate records of rental income and expenses for at least 5 years after the tax return deadline. Records may include:

  • Rent books and receipts
  • Invoices for expenses
  • Bank statements
  • Mileage logs for business journeys

Failure to maintain proper records can result in penalties from HMRC.

How to Report Rental Income

You must report rental income to HMRC through Self Assessment if:

  • Your rental profits exceed £1,000
  • You already file a tax return
  • HMRC has asked you to file a return

If you're not registered for Self Assessment, you must do so by October 5 following the tax year in which you earned rental income.

Data reflects HMRC updates for the 2025–2026 tax year. This content is for general guidance only.