Repairs, insurance, letting fees, etc.
Employment or other taxable income
Net Rental Income
£6,000.00
Tax After S24 Relief
£1,500.00
Effective Rate
12.5%
Monthly Profit
£500.00
Section 24: Since April 2020, landlords can no longer deduct mortgage interest from rental income. Instead, you receive a 20% tax credit on mortgage interest payments, regardless of your tax band. Higher-rate taxpayers pay more tax under this system than the old rules.
Everything you need to know about rental income tax in the UK
What expenses can landlords deduct?
Allowable expenses include: repairs and maintenance (but not improvements), insurance premiums, letting agent fees and management costs, legal fees for lets of a year or less, accountancy fees, ground rent and service charges, council tax and utility bills (if you pay them), advertising costs for finding tenants, and travel costs for property management. You cannot deduct the cost of improvements — these are capital expenditure and may reduce Capital Gains Tax when you sell.
How does Section 24 work?
Section 24 of the Finance Act 2015 (fully phased in since April 2020) restricts mortgage interest relief for individual landlords. Instead of deducting mortgage interest from rental income before calculating tax, you now add your full rental profit to your taxable income and receive a 20% tax credit on your mortgage interest. For basic-rate taxpayers, this makes no difference. For higher-rate (40%) taxpayers, you effectively lose 20% of the relief — and for additional-rate (45%) taxpayers, you lose 25%. This can also push you into a higher tax band, further increasing your tax bill. Companies are not affected by Section 24.
What is the property income allowance?
The property income allowance is a £1,000 tax-free allowance for rental income. If your total rental income is below £1,000, you do not need to declare it to HMRC or pay any tax on it. If your income exceeds £1,000, you can choose to deduct the £1,000 allowance instead of claiming actual expenses — whichever gives you the better result. You cannot use the property allowance and claim actual expenses at the same time.
Do I pay National Insurance on rental income?
In most cases, no. Rental income is not subject to National Insurance contributions because it is classified as investment income, not earned income. However, if HMRC considers your property lettings to be a trade (for example, if you run a furnished holiday let business or actively provide services like a hotel), you may be liable for Class 2 and Class 4 NI. For typical buy-to-let landlords, only income tax applies.
HMRC-Aligned: This calculator uses official HMRC rates and thresholds for the 2025/26 tax year (6 April 2025 – 5 April 2026). Results are indicative — for complex situations involving multiple properties, overseas income, or company structures, consult a qualified accountant.
This calculator uses official rates and thresholds from:
Last verified: February 2026 · Tax year 2025/26. Results are indicative — consult a qualified accountant for personalised advice.
Reviewed by M. Samiuddin Quadri, ACCA — Chartered Certified Accountant at Gladstone & Co. · Updated for the 2025/26 tax year.
Disclaimer: This calculator provides estimates based on current HMRC rates and thresholds for the 2025/26 tax year. It does not constitute professional tax, financial, or legal advice. Your actual liability may differ depending on your individual circumstances. Always consult a qualified accountant or tax adviser before making financial decisions. Read our terms