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Estimate tax on rental profit, understand the finance cost credit and compare 2026/27 with future 2027/28 rates.
Your estimated tax on rental profit for 2026/27 is £1,946, after a £1,200 finance cost credit.
Turn on the future property rates comparison to calculate 2027/28.
Example: illustrative £40,000 salary.
Rates as of
The finance cost restriction changes how an individual residential landlord accounts for mortgage interest when working out income tax. Instead of treating interest as an ordinary expense, this calculator finds property profit before interest and then works out the available finance cost credit. Keeping those two steps separate matters: a landlord can have little cash left after the mortgage yet still have taxable property profit.
Enter annual figures throughout. Allowable expenses are the non-finance costs deductible from rent, such as qualifying repairs and management fees. Mortgage interest belongs in its own field, without the capital part of a repayment mortgage. Your taxpayer status describes you, rather than the country where the rental property is.
The model calculates income tax twice, first on salary alone and then on salary plus rental profit. It includes the reduction in personal allowance above £100,000, so adding rent can also increase the tax attributable to salary. The difference between the two tax calculations, after the finance cost credit, is the tax shown for the property.
A negative property profit does not offset salary in this calculation. Where there is no positive profit, the effective-rate percentage is unavailable. Credit can be restricted even when interest has genuinely been paid; the amount entered is not a guarantee that all of it gives relief this year.
Consider an England or Northern Ireland taxpayer with £40,000 salary, £18,000 rental income, £5,000 allowable expenses and £6,000 mortgage interest. Profit before interest is £13,000. For 2026/27, £10,270 of that profit falls within the remaining basic-rate band and £2,730 falls in the higher-rate band. Tax before the credit is £3,146.
In the future comparison, £10,270 is charged at 22% and £2,730 at 42%, giving £3,406 before the £1,320 credit.
The 2027/28 comparison covers England and Northern Ireland and runs only when switched on; the tax-year selector does not turn it on.
The future rates were announced in 2025 and enacted by Finance Act 2026 for 6 April 2027. They are therefore labelled future law, rather than a proposal awaiting legislation. Scottish and Welsh 2027/28 property figures are shown as not yet set here. No England rate is substituted for them. The current Scottish calculation uses its published six income tax bands.
This tool is for individual residential landlords and models salary and one combined residential property business only. There are no fields for savings, dividends, pension contributions, Gift Aid, previous property losses, earlier unused finance costs or other allowances. They are excluded instead of being inferred. Expenses must be genuinely allowable; this form cannot decide whether a repair is instead a capital improvement. It does not calculate National Insurance, benefits, student loan deductions or tax payment dates.
HMRC's finance cost guidance supplies the restriction and the credit limits. The GOV.UK income tax table provides the 2026/27 thresholds. Finance Act 2026 and HMRC's technical note support the separate 2027/28 England and Northern Ireland property rates and the ordering of income and allowances.
Speak to an accountant or tax adviser about company or trust ownership, non-resident landlord status, jointly owned property, mixed residential and commercial borrowing, unused relief from earlier years or a disputed expense. Also seek advice when property income takes you into the personal allowance taper.
For individual residential landlords, mortgage interest is generally left out of deductible property expenses. Tax is calculated on profit before interest, followed by a restricted finance cost credit. Companies use different rules and are outside this calculator.
For 2026/27, relief is 20% of the lowest qualifying amount: finance costs, property profit or income above the personal allowance. It cannot reduce total income tax below zero. Unused finance costs may be carried forward, but this calculator has no brought-forward input.
Finance Act 2026 sets separate England and Northern Ireland property rates of 22%, 42% and 47% from 6 April 2027. The corresponding finance cost credit rate is 22%. These future rates were announced in 2025 and have now been enacted. Scottish and Welsh future results remain unavailable until their rates are confirmed.
You are responsible for reporting taxable rental income accurately. The calculator cannot determine whether you must register, complete a return or correct an earlier return. Follow HMRC's property income reporting guidance and ask an accountant if any rental income has been left undeclared.
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