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Rental income tax calculator
Landlord earning rental income from a tenant in your home or a buy-to-let property? Quickly calculate how much you can expect to pay in rental income tax.
Whether you’re renting out a whole property or a spare room in your home, our rental income tax calculator helps you estimate how much tax you may owe HMRC. It factors in the £1,000 Property Income Allowance and the Rent-a-Room Scheme threshold of up to £7,500, so you can understand your potential tax bill in under 60 seconds.
What you need to know before you start
- Tax-free allowances: £1,000 Property Income Allowance for buy-to-let landlords | £7,500 tax-free under the Rent-a-Room Scheme for live-in landlords
- What counts as rental income: rent payments, service charges your tenant pays you, and fees for use of furniture
- What you can deduct: letting agent fees, repairs and maintenance (like-for-like only), landlord insurance, utilities included in the rent, and mortgage interest (as a 20% tax credit)
- Key deadline: file and pay by 31 January 2027 for the 2025/26 tax year
Your situation
Tax and profit
- Earnings from rent£18,000£1,000 tax-free property allowance
- Property tax to pay£4,346
- After-tax rental income£13,654
How your rental income tax is calculated
Your total rental income tax that you have to pay to HMRC depends on three things:
- How much you earned from rent
- If you also live there or not
- How much you earned from other income sources (salary, self-employment, etc., but not capital gains)
In your case you earned £18,000 from renting out a buy to let property, on top of £38,000 from other sources.
Rental income tax breakdown
Your rental earnings are £18,000
You can claim £1,000 as a tax-free property allowance.
As a result, your taxable rental income will be: £17,000
The first £12,270 will be taxed at 20%: £2,454 in rental income tax.
The next £4,730 will be taxed at 40%: £1,892 in rental income tax.
So your total tax bill ends up at £4,346
Tax bill amount £4,346
I want to pay by
Savings frequency
You need to save
£6.53 per day
to pay your £4,346.00 tax bill by 31/1/2026 which is in 666 days
Not sure if this is right?
Get your calculation reviewed by an accredited accountant in a 30-minute consultation for £139, so you know exactly where you stand.
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Let an accredited accountant prepare and file your Self Assessment return for you. Fixed fee, no surprises.
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Not sure what your result means for you
Watch our free guide for accidental landlords — covering what to declare, what you can claim, and when you need to file.
Not sure if you’re getting your rental income tax right?
Many landlords miss allowable expenses, apply mortgage interest relief incorrectly, or simply overpay because they’re not sure what they can claim.
Our ACCA, CIMA or CTA accredited accountants can help. Book a 30-minute consultation and get clarity on your landlord tax position – from someone who knows it inside out.
What taxes do I pay as a landlord?
When you rent out a property or a room in your home, you may need to pay tax on what you earn. There are two taxes to be aware of:
- Income Tax: on the profit you make from rental income each year
- Capital Gains Tax: on any profit you make when you sell a property
Our calculator covers both types of landlord:
| Landlord type | Tax-free allowance | What you pay tax on | When you must file |
| Renting out a whole property | £1,000 Property Income Allowance | Rental profit above £1,000 | Rental profit of more than £2,500 after expenses, or gross rental income of £10,000 or more.
Gross rental income of £1,000 to £2,500? Contact HMRC, you may not need to file. |
| Renting out a room in your home. | £7,500 Rent-a-Room Scheme | Rental income above £7,500 | Gross rental income above £7,500 |
Good to know: running a furnished holiday let or renting out a property on Airbnb? Since 6 April 2025, the Furnished Holiday Lettings regime no longer applies. Your rental income is now taxed as ordinary property income, the same rules as any other buy-to-let.
If your qualifying income (gross rental and self-employment income) was over £50,000 in 2024/25, you must follow Making Tax Digital for Income Tax from 6 April 2026. The threshold drops to £30,000 from April 2027, based on 2025/26 income, and to £20,000 from April 2028 under current plans. Read our full guide to Making Tax Digital for landlords.
How does income tax work on rental income?
When you earn rental income, you don’t just pay tax on the rent itself. You pay tax on your profit. That means you can deduct allowable expenses first, and what’s left is added to your other income and taxed at the Income Tax rates that apply to you.
How rental income is taxed
Your rental profit is added to all your other income and taxed together. Your salary, pension or any other earnings all count towards which band you fall into.
Here are two examples using realistic figures for the 2025/26 tax year (England, Wales and Northern Ireland).
Example 1: Employed landlord
Emma earns a £38,000 salary and receives £12,480 in rental income. After claiming £2,000 in allowable expenses, her rental profit is £10,480.
| Total income | £48,480 |
| Personal Allowance | £12,570 |
| Taxable income | £35,910 |
| Tax at 20% (basic rate) | £7,182 |
Emma’s rental profit falls entirely within the basic rate band. She pays 20% on £10,480 = £2,096 in tax on her rental income.
Example 2: Retired landlord
David receives a £10,000 pension and £12,480 in rental income. After expenses of £1,500, his rental profit is £10,980.
| Total income | £20,980 |
| Personal Allowance | £12,570 |
| Taxable income | £8,410 |
| Tax at 20% (basic rate) | £1,682 |
David’s pension uses £10,000 of his Personal Allowance, leaving £2,570 to set against his rental profit. The remaining £8,410 of rental profit is taxed at 20%, so he pays £1,682 in tax on his rental income.
Mortgage interest relief: how the 20% tax credit works
Until 5 April 2017, landlords could deduct their mortgage interest from rental profit before working out their tax. From 6 April 2017 this changed. Mortgage interest is no longer deducted. Instead, you get a basic rate tax credit of 20% of the interest you paid. The change was phased in over several years and has applied in full since 2020/21.
The credit is worth 20% of the interest you pay, whatever your tax rate. For a basic rate taxpayer this matches the old deduction. For a higher rate taxpayer it gives less relief than before.
Example: Emma, with a mortgage
Emma’s figures are the same as above: a £38,000 salary and £10,480 of rental profit. She also pays £8,000 of mortgage interest in the year.
| Rental profit (before mortgage interest) | £10,480 |
| Total income (salary + rental profit) | £48,480 |
| Taxable income (after Personal Allowance of £12,570) | £35,910 |
| Income Tax before the credit (20%) | £7,182 |
| Mortgage interest credit (20% × £8,000) | –£1,600 |
| Income Tax to pay | £5,582 |
The £1,600 credit reduces Emma’s final tax bill directly. It is not a deduction from her rental profit.
Good to know:
- The credit only covers the interest part of your mortgage payments. Capital repayments do not qualify.
- The credit is capped at the lowest of three amounts: your finance costs, your property profit, or your adjusted total income above the Personal Allowance. Any unused amount can be carried forward to future years.
Not sure how much mortgage interest you paid last year? Book a consultation with an accredited accountant.
Joint ownership: how to split rental income (and save tax)
If you own a rental property with someone else, HMRC assumes you share the income equally, 50/50.
If one owner pays a higher rate of Income Tax than the other, a different split may reduce your combined tax bill. If you want income and expenses shared differently, you can declare this to HMRC on Form 17 (Declaration of beneficial interests in joint property and income). You cannot choose a split just to save tax.
Example: higher-rate and basic-rate partners (2025/26, England, Wales and Northern Ireland)
Partner A earns a £50,000 salary and Partner B earns a £20,000 salary. The property brings in £20,000 of rent a year.
| 50/50 split | 10/90 split | |
| Partner A’s share of rent | £10,000 | £2,000 |
| Partner A’s tax on that rent | £3,946 | £746 |
| Partner B’s share of rent | £10,000 | £18,000 |
| Partner B’s tax on that rent | £2,000 | £3,600 |
| Total tax on rental income | £5,946 | £4,346 |
For Partner A, the first £270 of rental profit is taxed at 20% and the rest at 40%, because the salary already uses most of the basic rate band. Partner B’s whole share falls within the basic rate band.
With a 10/90 split, the couple pays £1,600 less in tax on the rental income each year, if the split reflects how the property is genuinely owned.
Want to see whether a different ownership split could work for you? Book a consultation.
What if I’m a live-in-landlord?
If you rent out a furnished room in your main home, the Rent-a-Room Scheme lets you earn up to £7,500 a year tax-free (£3,750 each if you share the income with a joint owner). If your gross rental income stays at or below this limit, you don’t need to tell HMRC, unless you already file a Self Assessment return.
What counts as furnished accommodation?
The room must be furnished, in your only or main home, and you must live there while it’s let.
What if I earn more than £7,500?
You can choose between two options:
- Use the allowance: pay tax on the income above £7,500. You cannot deduct expenses.
- Pay tax on profit: deduct your allowable expenses from your rental income, then pay tax on what’s left.
Example: Priya earns £12,000 from a furnished room and has £8,000 of expenses. She pays tax at the basic rate of 20%.
- Using the allowance: £12,000 − £7,500 = £4,500 taxable, so £900 tax
- Paying tax on profit: £12,000 − £8,000 = £4,000 taxable, so £800 tax
Paying tax on profit saves Priya £100. This option only works in your favour when your expenses are higher than £7,500. You can switch between the two methods from one tax year to the next, but you must tell HMRC within the time limit.
I’m selling my property. What now?
If you sell a rental property for more than you paid for it, you may need to pay Capital Gains Tax on the profit. Our Capital Gains Tax calculator helps you estimate what you could owe.
If you also need to file a Self Assessment return, an accredited accountant can prepare and file it for you.
Landlords filing their Self Assessment with Taxfix get:
- A review of your mortgage interest relief by an accredited accountant
- A check for allowable expenses you might otherwise miss
- A joint ownership split review, if you own the property with someone else
- Filing covered by our Accuracy Guarantee
- A fixed fee, with no surprises
Need to file your Self Assessment as a landlord? Let an accredited accountant handle it for a fixed fee.
FAQ: Rental income tax calculator
How much tax do you pay on rental income?
You pay 20%, 40% or 45% on your rental profit, depending on your total income. For 2025/26 in England, Wales and Northern Ireland, use our rental income tax calculator to estimate your bill.
Do I pay tax on rental income if I live in the property?
Yes, but only on income above the Rent-a-Room limit. If you rent out a furnished room in your main home, you can earn up to £7,500 a year tax-free in 2025/26 (£3,750 each if you share the income). Our landlord tax calculator covers both live-in and buy-to-let scenarios.
Can I claim mortgage payments as a landlord expense?
No, you cannot deduct the full mortgage payment. You can claim a 20% tax credit on the interest you paid, but capital repayments do not qualify. Our buy-to-let tax calculator can help you estimate your tax bill.
What is the £1,000 property allowance?
The property allowance is a tax-free amount of £1,000 of gross rental income per tax year (2025/26). If your income is above £1,000, you can deduct the £1,000 allowance instead of your actual expenses, whichever works out better for you.
Do I need to file a tax return if I only earn £500 in rent?
No. If your gross rental income is £1,000 or less in the tax year, you don’t need to report it or file a return for it, unless you already file for another reason. Our rental income calculator can help you check your position.
How do I split rental income with a joint owner?
HMRC assumes you share rental income equally, 50/50. If you want income and expenses shared differently, you can declare this on Form 17.
What expenses can landlords claim on their tax return?
You can claim costs that are wholly and exclusively for the letting, such as letting agent fees, like-for-like repairs, landlord insurance and utilities included in the rent. Improvements and mortgage interest are treated differently, so check the rules before claiming.
