UK Rental Income Tax Calculator 2026/27

Your rental profit is added to your other income and taxed at your marginal rate. For 2026/27 that means 20%, 40% or 45% depending on the band the profit falls into. Profit is rent received less allowable expenses, and since April 2020 mortgage interest is not one of those expenses — it is relieved separately as a basic rate tax credit instead.

Yes. From 6 April 2027 property income gets its own set of rates: a property basic rate of 22%, a property higher rate of 42% and a property additional rate of 47%. That is two percentage points above the main rates at every level. The personal allowance and the rate bands themselves are unchanged, so the extra cost falls purely on landlords. Switch the tax year in this calculator to see the difference on your own figures.

Section 24 removed the deduction for residential finance costs. Instead of reducing your rental profit, mortgage interest now gives a tax credit at the basic rate. The credit is the lower of three amounts: your finance costs, your property profits, and your adjusted total income above the personal allowance. That third cap is the one most calculators ignore, and it is why some landlords receive noticeably less relief than they expect.

It does. Finance cost relief follows the new property basic rate, so it rises from 20% to 22% from 6 April 2027. That softens the blow of the higher property rates slightly, but it does not offset it. A higher-rate landlord pays two points more on the whole profit and recovers two points more only on the interest, so anyone whose profit exceeds their interest is left worse off.

It is a tax exemption of up to £1,000 a year on property income. If your gross rents are £1,000 or less you generally have nothing to declare. Above that you can choose to deduct the £1,000 instead of your actual expenses, which suits low-cost lettings. You cannot claim it alongside actual expenses and you cannot combine it with finance cost relief, so this calculator works out both routes and applies whichever leaves you better off.

Each owner is taxed on their share of the profit at their own marginal rate, and each has their own £1,000 property allowance. Spouses and civil partners are taxed 50:50 by default regardless of the actual split, unless they hold the property as tenants in common in unequal shares and submit a Form 17 declaration with supporting evidence. Setting the ownership share above shows one owner’s position rather than the property’s.

If you live abroad for six months or more, your letting agent, or your tenant where there is no agent, must deduct basic rate tax from your rent and pay it to HMRC quarterly. It is a withholding on account rather than a final tax: you still file a Self Assessment return and the tax deducted is credited against your bill. The rate follows the property basic rate, so it is 20% now and becomes 22% from April 2027.

Yes. You can apply to HMRC for approval to receive rents gross, and approval is normally given where your UK tax affairs are up to date and you undertake to file returns. It does not remove the tax, it removes the withholding, which is a real cash flow gain because the deduction is otherwise taken from your rent long before your liability is actually calculated. Tick the approval box above to see the effect on your position.

Not automatically, and this is the point that catches Americans hardest. You get it if you are a UK or EEA national, and certain other groups qualify, including nationals of a list of countries whose treaty with the UK provides for it. The United States is not on that list. So a US citizen with no British or EEA nationality, living abroad and letting a UK property, is generally taxed from the first pound of profit rather than from £12,570.

Then you qualify through your British nationality and the personal allowance is available in the normal way. The same is true if you hold the nationality of an EEA state. This is why the answer differs so sharply between two Americans with apparently identical properties, and why it is worth checking rather than assuming. Dual nationals are frequently given the wrong answer by letting agents.

Revenue costs incurred wholly and exclusively for the letting: letting agent and management fees, insurance, ground rent and service charges, repairs and maintenance, accountancy, and utilities or council tax where you pay them. You can also deduct the cost of replacing domestic items on a like-for-like basis. Capital costs such as improvements and the purchase price are not deductible against income, though they usually reduce the capital gain when you sell.

Not in the ordinary case. Rental income is investment income rather than earnings, so no National Insurance arises. It only becomes an issue where the letting is run as a genuine trade, which requires substantial services beyond those a landlord normally provides and is a high bar to clear. The absence of National Insurance is one reason property profit has been taxed relatively lightly, and part of the rationale for the separate property rates from 2027.

You must notify HMRC if you have property profits to declare. Non-resident landlords are within Self Assessment even where tax has already been withheld, because that withholding is only a payment on account. Filing is also how you recover an over-deduction, which is common where your expenses are substantial or you are entitled to the personal allowance and the agent has withheld on the gross rent anyway.

Yes, it is live. From 6 April 2026 you must keep digital records and file quarterly updates if your qualifying income from self-employment and property exceeds £50,000. The threshold falls to £30,000 from April 2027 and £20,000 from April 2028. Qualifying income is measured on gross rents before any expenses or allowances, so a heavily mortgaged portfolio can be caught by the rules while producing very little actual profit.

A US citizen or green card holder reports worldwide rental income on Schedule E regardless of where the property sits, so the same letting is taxed by both countries and relieved through the foreign tax credit. The difficulty is that the two systems measure the profit very differently, so the credit rarely lines up with the liability. That mismatch, rather than the headline rates, usually determines whether you end up paying twice.

Two reasons, pulling the same way more often than not. First, the United States still allows a full deduction for mortgage interest, which the UK denies under Section 24, so the US profit is lower for a geared landlord. Second, the United States requires depreciation of the building, which the UK does not give at all, lowering the US profit further. The result is a large UK profit taxed at UK rates alongside a small or negative US profit with little US tax for the credit to offset.

Effectively yes. Depreciation is allowed or allowable, meaning your basis is reduced by the depreciation you could have claimed whether or not you actually claimed it. Skipping it does not preserve the deduction, it forfeits the relief while still increasing the gain when you sell. Because the property is outside the United States it must use the Alternative Depreciation System, over 30 years if first let after 2017 and 40 years if first let before 2018.

It becomes an excess foreign tax credit in the passive basket, carried back one year and forward ten. Many landlords never use it, because the same structural mismatch repeats every year and there is rarely enough US tax on passive income to absorb it. Watching that balance build up unused is a strong signal that the position needs restructuring rather than simply reporting again.

No. A UK property loss is carried forward against future profits of the same property business and cannot be set against your other income. A US rental loss is usually passive and suspended until you have passive income or sell the property, subject to the special allowance for active participation which phases out at higher incomes. A loss-making let can therefore be stranded on both sides at once.

Model both tax systems on the same figures before you commit rather than afterwards. The questions that move the numbers most are whether you qualify for the personal allowance, how the purchase is financed given Section 24, whether ownership should be split with a spouse, what the depreciation position will look like on eventual sale, and whether the foreign tax credits you generate will ever actually be usable. Those decisions are cheap at the outset and expensive to unwind later.