Buy-to-Let Landlord Tax Calculator 2026/27

Buy-to-Let Landlord Tax Calculator

✓ Verified for 2026/27

Rental & Expense Details

£
£
Required to calculate your Section 24 tax relief credit.
£
Insurance, letting fees, maintenance, etc. (Interest excluded)
£
Salary, pensions, etc. Determines your income tax bracket.
ⓘ

Section 24 rules apply: You cannot deduct mortgage interest from your rental income before calculating tax. Instead, you receive a 20% basic rate tax credit on your interest costs.

Tax on Rental Income
£2,400
After Section 24 Credit
Net Monthly Cashflow
£633
after expenses, interest, & tax
Section 24 Tax Credit
£1,200
applied reduction
Effective Tax Rate
15.0%
on net rental profit

BTL Annual Breakdown

Gross Rental Income £18,000
Allowable Operating Expenses -£2,000
Mortgage Interest Paid -£6,000
Income Tax Payable -£2,400
Net Annual Rental Cash Profit £7,600
Net Profit 42%
Tax & Costs 58%

How We Calculated This

  1. Input income and expenses: Set annual rental income, mortgage interest, and eligible running expenses.
  2. Apply Section 24 Rules: Rental profit is calculated as Rental Income minus expenses, without deducting mortgage interest.
  3. Calculate Income Tax: Rental profit is added to other personal earnings, and tax is computed based on the tax band.
  4. Apply Section 24 Tax Credit: Deduct 20% of the mortgage interest from the final tax bill as a basic rate tax credit.

Real-World Examples

Example: Landlord earning £50,000 other income + £20,000 rental income (with £10,000 mortgage interest)

Calculates BTL tax with Section 24 mortgage relief restrictions.

Other Income: £50,000 (Basic/Higher rate threshold)
Rental Income: £20,000
Allowable Expenses: £2,000
Mortgage Interest: £10,000

Taxable Rental Profit (excluding interest): £18,000
Income Tax on Rental Profit (40% higher rate): £7,200
Section 24 Tax Credit (20% of £10,000 mortgage interest): -£2,000

Net Tax Due on Rental Profit: £5,200
Actual Cash Profit: £20,000 - £2,000 - £10,000 - £5,200 = £2,800

Frequently Asked Questions

What is Section 24 tax change?

Section 24 prevents landlords from deducting mortgage interest from rental income before calculating tax. Instead, landlords receive a 20% basic rate tax tax credit for their finance costs.

How can landlords reduce Section 24 tax liability?

Common strategies include purchasing property through a Limited Company (where mortgage interest remains fully deductible as an expense) or making additional personal pension contributions to drop tax bands.

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About This Calculator

This calculator uses the latest HMRC rates for the 2026/27 tax year. For illustrative purposes only — always consult a qualified tax adviser for formal advice.