Buy-to-Let Tax Calculator UK 2026/27
Calculate your buy-to-let tax liability for 2026/27. Includes Section 24 mortgage interest restriction, tax bands, and effective rate.
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Understanding Buy-to-Let Tax in 2026/27
UK landlords pay income tax on their rental profits. The key things to understand are how rental profit is calculated, how Section 24 affects mortgage interest, and what expenses you can deduct.
How Rental Profit Is Calculated
Rental Profit = Rental Income - Allowable Expenses
This profit is added to your salary and other income, then taxed at your marginal rate. This means rental income can push you into a higher tax band.
Section 24: The Mortgage Interest Restriction
Before Section 24, landlords could deduct their full mortgage interest from rental income. Now, mortgage interest is not deductible at all. Instead, you receive a tax credit worth 20% of your mortgage interest payments.
Impact example: A higher-rate taxpayer with £6,000 mortgage interest previously saved £2,400 in tax (40%). Now they save only £1,200 (20% credit) — costing an extra £1,200 per year.
2026/27 UK Tax Bands
| Band | Taxable Income | Rate |
|---|---|---|
| Personal Allowance | Up to £12,570 | 0% |
| Basic Rate | £12,571 - £50,270 | 20% |
| Higher Rate | £50,271 - £125,140 | 40% |
| Additional Rate | Over £125,140 | 45% |
Making Tax Digital from April 2026
Landlords with property income over £50,000 must use MTD-compatible software from April 2026 to keep digital records and submit quarterly updates to HMRC. The threshold drops to £30,000 from April 2027.
Should You Use a Limited Company?
Some landlords incorporate to avoid Section 24. Companies can deduct full mortgage interest and pay corporation tax (25%) rather than income tax. However, transferring existing properties incurs stamp duty and CGT. Read our limited company guide for a full analysis.
Frequently Asked Questions
How is buy-to-let income taxed in the UK?
Rental profit (income minus allowable expenses) is added to your other income and taxed at your marginal rate: 20% basic, 40% higher, or 45% additional. Mortgage interest is no longer a deductible expense — instead you get a 20% tax credit under Section 24.
What is Section 24 and how does it affect me?
Section 24 removed the ability to deduct mortgage interest from rental income. Instead, you receive a tax credit at the basic rate (20%) of your mortgage interest. This particularly affects higher-rate taxpayers, who previously deducted interest at 40%.
What expenses can I deduct from rental income?
You can deduct repairs, insurance, letting agent fees, accountancy, ground rent, service charges, travel costs, and more. See our full landlord tax deductions guide for the complete list. Note: mortgage interest is NOT deductible — it receives a separate 20% credit.
Do I need to file a tax return as a landlord?
Yes. If you receive rental income, you must register for Self Assessment and file a tax return (using the SA105 property supplement). From April 2026, landlords with income over £50,000 must also comply with Making Tax Digital.