Employment, self-employment or pension income (before tax). This determines your tax band.
Section 24: Mortgage interest is no longer deductible from rental income. Instead you receive a 20% tax credit on mortgage interest payments. This calculator applies Section 24 automatically.
Net Portfolio Income
£10,800.00
Tax After Relief
£2,700.00
Effective Rate
12.5%
Monthly Income
£900.00
Property 1
Property 2
Everything you need to know about rental income tax and Section 24
How rental income is taxed
Rental income from UK property is taxed as part of your overall income. All rental profits from your entire portfolio are pooled together on your Self Assessment tax return. You can deduct allowable expenses such as letting agent fees, insurance, repairs, and maintenance from your rental income before tax. Mortgage interest, however, is treated differently under Section 24 rules introduced from April 2020.
Section 24 and mortgage interest
Since April 2020, individual landlords can no longer deduct mortgage interest from rental income. Instead, you receive a basic rate (20%) tax credit on your total mortgage interest payments. This means higher and additional rate taxpayers pay more tax on their rental income than they did under the old rules. The tax credit is applied after your income tax liability is calculated, reducing the final amount you owe.
Planning your portfolio
When assessing the viability of buy-to-let investments, it is essential to consider the effective tax rate on your rental income. Higher rate taxpayers are particularly affected by Section 24, as the gap between their marginal tax rate and the 20% relief rate means a larger tax bill. Some landlords have chosen to incorporate, as limited companies can still deduct mortgage interest as a business expense — though this comes with Corporation Tax and additional costs.
Limited company vs. individual ownership
Incorporating your property portfolio can be tax-efficient, particularly for higher rate taxpayers, because limited companies can still deduct mortgage interest as a business expense and pay Corporation Tax (currently 25%) rather than income tax. However, transferring existing properties to a company triggers Stamp Duty Land Tax (SDLT) and potentially Capital Gains Tax. Always seek professional advice before incorporating.
HMRC-Aligned: This calculator uses official 2025/26 income tax rates and Section 24 rules. For complex portfolios involving limited companies, overseas properties, or furnished holiday lets, consult a qualified accountant or tax adviser.
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