Buy-to-Let Profit Calculator: Your Real After-Tax Return (2026/27)
Last updated 24 June 2026 · 9 min read · By the LandlordTaxAi Editorial Team
The short answer
Your real buy-to-let return is what’s left after tax. Start with rent, take off running costs and mortgage interest to get cash profit, then apply income tax — remembering that mortgage interest is taxed under Section 24, not deducted. The free calculator above shows your gross yield, net yield and after-tax profit for 2026/27.
Plenty of buy-to-let calculators show a flattering "yield" and stop there. The number that actually matters is what lands in your bank account after the mortgage and the taxman — and since Section 24, those two no longer move together.
The calculator above works out the full picture: gross yield, net yield, and your genuine after-tax cash profit for 2026/27. This guide explains each figure so you can judge a property — or your existing portfolio — honestly.
For the tax mechanics behind the numbers, see the rental income tax calculator and how Section 24 works.
Free calculator · no sign-up
Buy-to-Let Profit & Yield Calculator
Work out gross yield, net yield and your real after-tax cash profit for 2026/27, with Section 24 applied.
Result
- Gross rental yield
- 6.00%
- Net rental yield
- 4.91%
Estimate only, based on England/Wales/NI 2026/27 bands. Not personalised investment or tax advice.
The four numbers that define a buy-to-let
A property’s headline rent tells you almost nothing on its own. Four figures together tell you whether it’s a good investment.
| Figure | How it’s worked out | What it tells you |
|---|---|---|
| Gross yield | Annual rent ÷ property value × 100 | Headline return before any costs |
| Net yield | (Annual rent − running costs) ÷ value × 100 | Return after costs, before mortgage & tax |
| Cash profit | Rent − costs − mortgage interest | What’s left before tax |
| After-tax profit | Cash profit − income tax (Section 24 applied) | What you actually keep |
Gross yield is useful for comparing areas; after-tax profit is what decides whether the deal works for you, at your tax rate.
Why the mortgage matters twice
Mortgage interest hits your return in two places, and this is where most calculators go wrong. It reduces your cash profit directly — money out the door. But for tax, you can’t deduct it from profit; under Section 24 you only get a 20% basic-rate tax reducer.
For higher-rate landlords this is the crux of the buy-to-let squeeze: you’re taxed at 40% on profit that includes the interest, and only relieved at 20%. A geared property can look fine on cash flow yet deliver a thin after-tax return.
In extreme cases a heavily mortgaged higher-rate landlord can owe tax larger than their cash profit, because tax is charged before interest. The calculator above models this so you see it before you buy. More in Section 24 worked examples.
2026/27 tax rates the calculator applies
Your after-tax profit depends on your tax band, which is frozen for 2026/27. These are the England, Wales and Northern Ireland figures.
| Band | 2026/27 taxable income | Rate |
|---|---|---|
| Personal Allowance | Up to £12,570 | 0% |
| Basic rate | £12,571 – £50,270 | 20% |
| Higher rate | £50,271 – £125,140 | 40% |
| Additional rate | Over £125,140 | 45% |
Rental profit stacks on top of your other income, so a property can push you into the next band. The calculator accounts for your existing income when working out the tax.
How to use the buy-to-let calculator above
Judge every property on what you actually keep
LandlordTaxAi tracks real income, costs and Section 24 across your portfolio and shows your live after-tax return — so you invest on facts, not flattering yields.
See how it worksA worked example
Meera buys a £200,000 flat letting for £12,000 a year. Costs £2,000, mortgage interest £5,000. She’s a higher-rate taxpayer (2026/27).
| Gross yield (£12,000 ÷ £200,000) | 6.0% |
| Net yield ((£12,000 − £2,000) ÷ £200,000) | 5.0% |
| Cash profit (£12,000 − £2,000 − £5,000) | £5,000 |
| Taxable profit (interest NOT deducted) = £10,000 × 40% | £4,000 tax |
| Section 24 reducer (20% × £5,000) | −£1,000 |
| Tax after reducer | £3,000 |
| After-tax profit (£5,000 cash − £3,000 tax) | £2,000 |
A healthy 6% gross yield becomes just £2,000 of real after-tax profit once the mortgage and Section 24 are applied — exactly the gap the calculator exists to expose.
Frequently asked questions
What’s a good buy-to-let yield in 2026?
Gross yields of 5–8% are typical, but the right benchmark is after-tax profit, which depends on your mortgage and tax band. Use the calculator to compare like for like.
Does the calculator include Section 24?
Yes. Mortgage interest reduces your cash profit but is taxed via the 20% basic-rate reducer, not deducted — the calculator applies this automatically.
What’s the difference between gross and net yield?
Gross yield is rent ÷ property value. Net yield subtracts running costs first, so it reflects the return after costs but before mortgage and tax.
Why is my after-tax profit so much lower than my yield?
Because yield ignores your mortgage and your tax. For higher-rate landlords, Section 24 means tax is charged on profit before interest, which can sharply cut the real return.
Should I buy through a limited company instead?
Companies still deduct mortgage interest in full, which can help highly geared higher-rate landlords — but bring extra costs and CGT/SDLT considerations. Take advice first.
Does this work for Scotland?
It uses England/Wales/NI income tax bands. Scottish taxpayers have different rates above basic, so their after-tax profit will differ.
Written and reviewed by the LandlordTaxAi Editorial Team. Our guides are reviewed against current HMRC guidance and updated when the rules change. Operated by LandlordTaxAi, United Kingdom. Follow us on LinkedIn.
Last reviewed: 24 June 2026 · Researched against primary UK sources for the 2026/27 tax year: https://www.gov.uk/income-tax-rates; https://www.gov.uk/guidance/changes-to-tax-relief-for-residential-landlords-how-its-worked-out-including-case-studies; https://www.gov.uk/guidance/income-tax-when-you-rent-out-a-property-working-out-your-rental-income. This article is informational only and does not constitute tax advice. Check the latest details on GOV.UK or with a qualified accountant.