Question 1

How is tax on rental income actually worked out?

Accepted Answer

Your rental income minus allowable running costs gives your taxable rental profit. That profit is then added on top of any other income you have (salary, pension, self-employment) to work out which income tax bands it falls into, since UK income tax is progressive: each slice of income is taxed at the rate for the band it sits in, not a single flat rate on everything. Mortgage interest is not deducted as an expense; instead it earns a separate flat-rate credit (see Section 24 below).

Question 2

Why does my "other income" affect the tax on my rental profit?

Accepted Answer

Income tax bands apply to your total income, not each income source in isolation. If your salary already uses up your Personal Allowance and basic-rate band, your rental profit gets stacked on top and taxed at the next available rate, which could be the higher or even additional rate. This calculator stacks your rental profit above your other income to show you the rate it actually falls into, band by band.

Question 3

What is the Section 24 credit shown in my results?

Accepted Answer

Since April 2020, mortgage interest on residential lets can no longer be deducted as an expense. Instead you receive a flat-rate tax credit (20% in 2026/27, rising to 22% from April 2027) on the interest you've paid, which is subtracted directly from your tax bill. It often does not fully offset the tax on the equivalent amount of profit for higher-rate taxpayers, which is why your net tax can feel disproportionate to your real cash profit.

Question 4

How does the comparison between 2026/27 and 2027/28 work?

Accepted Answer

From 6 April 2027, property income moves onto its own separate, higher rates (22%/42%/47%), the Section 24 credit rises to 22%, and the Personal Allowance is set against employment, pension and trading income before property income. We run your figures through both rule sets so you can see, side by side, exactly how much more tax the same rental profit would attract once the new rules take effect.

Question 5

Does this calculator handle Scottish income tax?

Accepted Answer

Scotland sets its own income tax rates and bands, which apply to non-savings, non-dividend income (including rental profits) for Scottish taxpayers, and these differ from the rest of the UK. This calculator uses standard England, Wales and Northern Ireland rates throughout. If you pay the Scottish rate of income tax, treat the figures here as an indicative guide rather than an exact calculation of your bill.

Rental Income Tax Calculator

Your results — 2026/27

2026/27 vs 2027/28, side by side

Frequently asked questions

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Rental Income Tax Calculator

Your results — 2026/27

2026/27 vs 2027/28, side by side

Frequently asked questions

How is tax on rental income actually worked out?−

Why does my "other income" affect the tax on my rental profit?+

What is the Section 24 credit shown in my results?+

How does the comparison between 2026/27 and 2027/28 work?+

Does this calculator handle Scottish income tax?+

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