Rental Income Tax Calculator 2026/27: Work Out What You’ll Really Pay
Last updated 24 June 2026 · 8 min read · By the LandlordTaxAi Editorial Team
The short answer
Your rental tax for 2026/27 is charged at your income tax rate — 20%, 40% or 45% — on your rental profit, not your rent. Mortgage interest is no longer deducted from profit; instead you get a 20% basic-rate tax reducer under Section 24. Use the free calculator above to see your figure in seconds.
"How much tax will I pay on my rental income?" is the question every landlord wants answered before the numbers are final. The honest answer is: it depends on your profit, your other income, and how much of your bill is mortgage interest — which is taxed very differently since the Section 24 restriction fully landed.
The free calculator above gives you a 2026/27 estimate with no sign-up. This guide explains every number it uses, so you can trust the result and plan around it.
For the rules behind the inputs, see what you can claim as an allowable expense and how the Section 24 mortgage-interest restriction works.
Free calculator · no sign-up
Rental Income Tax Calculator 2026/27
Enter your rent, expenses and mortgage interest for an instant 2026/27 tax estimate with the Section 24 reducer applied.
Result
- Taxable profit (rent − expenses)
- £11,200
- Income Tax at 40%
- £4,480
- Less mortgage interest credit (20%)
- − £1,000
- Tax due on this property
- £3,480
- Income after tax
- £7,720
Estimate only, based on England/Wales/NI 2026/27 bands. Not personalised tax advice.
The three numbers your rental tax depends on
Rental income tax isn’t a flat rate. It’s worked out by stacking your rental profit on top of your other income and taxing it at whatever band it falls into. So three things drive the result:
- Your rental profit — rent received minus allowable expenses (but not mortgage interest)
- Your other taxable income — salary, pension, dividends — which decides your tax band
- Your finance costs — mortgage interest, which gets a separate 20% tax reduction
This is why two landlords with the same rent can pay very different tax: a higher earner pushes rental profit into the 40% band, while a basic-rate landlord stays at 20%.
2026/27 income tax bands the calculator uses
The Personal Allowance and thresholds are frozen for 2026/27 (and through to 2027/28), so the bands are the same as the previous two years. These are the England, Wales and Northern Ireland rates; Scotland has its own bands.
| 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% |
Your Personal Allowance is reduced by £1 for every £2 of total income over £100,000, disappearing entirely at £125,140 — creating an effective 60% band that catches many portfolio landlords.
Why mortgage interest isn’t a normal expense
Before 2017 landlords deducted mortgage interest from rental income like any other cost. The Section 24 restriction changed that completely. For 2026/27 you cannot deduct finance costs from your rental profit at all.
Instead, you get a basic-rate (20%) tax reducer equal to 20% of your finance costs. For a basic-rate landlord this is roughly neutral. For a higher-rate landlord it’s a real tax rise — you’re taxed on profit that includes the interest, then only get 20% relief back.
Section 24 can push a higher-rate landlord’s profit calculation high enough to lose Personal Allowance or child benefit. The calculator above models the reducer so your estimate reflects the real-world bill — see Section 24 worked examples.
How to use the calculator above
From estimate to MTD reality
From April 2026, landlords over £50,000 report this income through Making Tax Digital — four quarterly updates plus a final declaration, instead of one annual return. The tax owed is the same; the admin is more frequent.
A calculator like this is a useful sense-check, but MTD-compatible software does the quarterly maths automatically from your digital records. If you’re newly in scope, read how to register and whether you need to declare rental income at all.
Stop guessing your rental tax bill
LandlordTaxAi turns your bank statements into HMRC-ready figures, applies Section 24 automatically and shows your live tax estimate every quarter — no spreadsheets.
See how it worksA worked example
James earns £45,000 from a job and has a rental property: £18,000 rent, £3,000 expenses, £6,000 mortgage interest (2026/27).
| Rental profit (rent − expenses) | £15,000 |
| Total income (£45,000 + £15,000) | £60,000 |
| Profit taxed at 40% (above £50,270) | ≈ £15,000 in higher-rate band |
| Tax on rental profit before relief | £6,000 |
| Section 24 reducer (20% × £6,000) | −£1,200 |
| Estimated rental tax | £4,800 |
Because James is a higher-rate taxpayer, he’s taxed at 40% on the full £15,000 profit and only gets 20% relief on his interest — the Section 24 squeeze in one example.
Frequently asked questions
Is rental income taxed at a flat rate?
No. It’s added to your other income and taxed at your band — 20%, 40% or 45% for 2026/27. The calculator above stacks it correctly.
Can I still deduct my mortgage from rental income?
No. Since the Section 24 restriction, you cannot deduct mortgage interest from profit. You get a 20% tax reducer instead. Capital repayments were never deductible.
What’s the tax-free property allowance?
There’s a £1,000 property allowance. If your rental income is under £1,000 you usually don’t need to declare it; above that you can deduct either the allowance or your actual expenses, not both.
Does this calculator work for Scotland?
It uses the England, Wales and Northern Ireland bands. Scottish taxpayers have different rates and bands, so a Scottish landlord’s bill will differ above the basic rate.
Will I pay this quarterly under MTD?
MTD quarterly updates are informational summaries, not payments. Your actual tax is still due by 31 January after the tax year (with payments on account if applicable).
Does the calculator account for losing my Personal Allowance?
Yes — it applies the £1-for-£2 taper above £100,000, which is why high earners see an effective 60% rate on part of their income.
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/government/publications/the-personal-allowance-and-basic-rate-limit-for-income-tax-and-certain-national-insurance-contributions-nics-thresholds-from-6-april-2026-to-5-apr/income-tax-personal-allowance-and-the-basic-rate-limit-and-certain-national-insurance-contributions-thresholds-from-6-april-2026-to-5-april-2028; https://www.gov.uk/guidance/tax-relief-for-residential-landlords-how-its-worked-out. This article is informational only and does not constitute tax advice. Check the latest details on GOV.UK or with a qualified accountant.