Tax on Rental Income UK Calculator
Calculate your rental property tax liability for the 2025/26 tax year with our comprehensive calculator
Calculate Your Rental Income Tax
How Rental Income Tax Works in the UK
Current Tax Bands (2025/26)
| Tax Band | Taxable Income Range | Tax 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% |
Property Income Allowance
You can claim a tax-free property income allowance of £1,000 per year. This means the first £1,000 of rental income is not taxed. You can choose between claiming this allowance or deducting your actual allowable expenses, whichever is more beneficial.
Allowable Expenses
You can deduct certain expenses from your rental income to reduce your tax bill, including:
- Letting agent fees and property management costs
- Maintenance and repair costs (not improvements)
- Insurance premiums
- Legal and professional fees
- Advertising for tenants
- Accountancy fees
- Mortgage interest (subject to restrictions)
- Council tax and utility bills (if paid by landlord)
Section 24 Tax Changes
Since April 2020, mortgage interest relief has been restricted. Higher and additional rate taxpayers can only claim a basic rate (20%) tax credit on mortgage interest, rather than deducting it from rental income at their marginal tax rate.
Step-by-Step Calculation Guide
Step 1: Calculate Gross Rental Income
Add up all rental income received during the tax year, including rent payments, service charges, and any deposits retained from tenants.
Step 2: Deduct Expenses or Allowance
Choose between claiming the £1,000 property income allowance or deducting actual allowable expenses. The calculator will automatically select the most beneficial option.
Step 3: Calculate Net Rental Profit
Subtract your chosen deduction from your gross rental income to determine your taxable rental profit.
Step 4: Add to Other Income
Combine your net rental profit with income from other sources (salary, dividends, etc.) to determine your total taxable income.
Step 5: Apply Tax Rates
Calculate tax using the appropriate income tax bands based on your total taxable income.
Frequently Asked Questions
Yes, rental income is subject to income tax. However, you may be able to use the £1,000 property income allowance or deduct allowable expenses to reduce your tax liability.
The property income allowance is a tax-free allowance of £1,000 per year. If your rental income is £1,000 or less, you don’t need to pay tax on it. If it’s more than £1,000, you can choose to deduct the allowance instead of claiming actual expenses.
Due to Section 24 tax changes, you can no longer deduct mortgage interest directly from rental income. Instead, you receive a basic rate (20%) tax credit. This particularly affects higher and additional rate taxpayers.
You must file a Self Assessment tax return if your rental income (after deducting the property allowance) exceeds £1,000 per year, or if your total income from all sources requires you to file a return.
Allowable expenses include letting agent fees, maintenance and repairs, insurance, legal fees, advertising costs, accountancy fees, and some travel costs. Capital improvements and personal expenses are not allowable.
If you own rental property jointly with your spouse or civil partner, the income is usually split equally for tax purposes. However, you can elect to split it according to actual ownership percentages if different.
References
- HM Revenue and Customs. (2025). Income tax when you rent out a property: working out your rental income. GOV.UK. Available at: https://www.gov.uk/guidance/income-tax-when-you-rent-out-a-property-working-out-your-rental-income
- HM Revenue and Customs. (2025). Property rental income statistics: 2025. GOV.UK. Available at: https://www.gov.uk/government/statistics/property-rental-income-statistics
- HM Revenue and Customs. (2025). Income Tax rates and allowances: current rates. GOV.UK.
- Chartered Institute of Taxation. (2025). Taxation of rental income: current guidance and best practices.
- Association of Residential Letting Agents. (2025). Landlord tax obligations and compliance requirements.