Landlord Tax Calculator
The AbraTax landlord tax calculator estimates the Income Tax you may owe on your rental profits. It factors in the Section 24 mortgage interest restriction, your allowable expenses, and the relevant tax bands, so you get a clearer picture of your estimated liability before you file your Self Assessment return.
Who This Calculator Is For
This calculator is designed for:
- Buy-to-let landlords with one or more residential properties
- Accidental landlords who have started renting out a property they own
- HMO (house in multiple occupation) landlords
- Landlords with properties held in their own name, not in a limited company
- Anyone assessing how rental income, expenses, and finance costs affect their personal tax position
What You Need to Know
How Rental Income Is Taxed
Rental profit is added to your other income and taxed at the Income Tax rates that apply to your total income. For taxpayers in England, Wales, and Northern Ireland, rental profit may be taxed at 20%, 40%, or 45% depending on total income. Scottish taxpayers use Scottish rates for property income, so their result can differ.
Section 24: The Mortgage Interest Restriction
Before April 2017, landlords could deduct their full mortgage interest from rental income before calculating their tax bill. Section 24 of the Finance Act 2015 changed this. Landlords who hold properties in their own name can no longer deduct residential property finance costs as an expense. Instead, eligible finance costs may qualify for a basic-rate tax reduction. The amount of the reduction can be restricted depending on the landlord's property profits and taxable income.
This has a significant impact on higher-rate taxpayers. If you pay mortgage interest while only qualifying for relief at 20%, your net interest cost is higher than it would have been before Section 24. The calculator shows you the estimated impact of Section 24 on your liability.
Allowable Expenses
Property expenses that may be deductible, subject to the relevant conditions, include:
- Letting agent fees and management charges
- Buildings and contents insurance
- Repairs and maintenance, but not improvements
- Accountancy fees
- Council tax, water rates, and other utility costs you cover between tenancies
- Advertising costs for finding tenants
The Property Income Allowance
If gross property income is £1,000 or less in a tax year, the property allowance may mean it does not need to be reported, although exceptions apply. Above £1,000, the allowance may be available instead of actual expenses. The property allowance and residential finance-cost tax reduction cannot both be claimed for the same property business. This calculator does not model the property allowance or determine which deduction is available.
How to Use the Landlord Tax Calculator
- Select the tax year and where you live.
- Enter your total gross rental income and your other taxable income.
- Enter your allowable property expenses.
- Enter eligible residential property finance costs and any unused costs brought forward.
- The calculator will show rental profit, the Section 24 tax reduction, and your estimated additional Income Tax.
Frequently Asked Questions
Can I deduct my mortgage repayments?
No. Capital repayments are not deductible. Eligible residential property finance costs may qualify for a basic-rate tax reduction under Section 24, although the amount can be restricted.
What is the difference between a repair and an improvement?
Repairs restore a property to its original condition and are allowable expenses. Improvements enhance the property beyond its original state, for example by adding an extension, and are not immediately deductible, though they may reduce capital gains tax when you eventually sell.
Does this calculator compare individual and company ownership?
No. Companies pay Corporation Tax rather than Income Tax, and the Section 24 restriction does not apply to companies. A property transfer can be treated as a disposal for Capital Gains Tax, and Stamp Duty Land Tax or an equivalent property transaction tax may also apply. The calculator does not compare ownership structures.
I rent out a room in my own home. Does this calculator apply to me?
Possibly. If your rental income under the Rent a Room scheme is below £7,500, you may be exempt from tax. If you exceed that threshold or choose not to use the scheme, your net income may be taxable. This calculator does not model Rent a Room relief.
What records do I need to keep?
Keep records of all rental income received and all expenses paid, with supporting receipts or bank statements, for at least five years after the 31 January filing deadline for the relevant tax year.
Limits of This Illustration
Finance costs and mortgage terms affect the cash result shown. The calculator does not assess mortgage products, loan-to-value decisions, interest-rate choices, or whether any financial change is suitable.
Company ownership follows different tax rules and is outside this calculator. Transferring a property can involve Capital Gains Tax, Stamp Duty Land Tax or its regional equivalent, and other costs.
Whether an expense is allowable depends on the facts and the relevant conditions. The figures entered are treated as allowable for this illustration; the calculator does not determine entitlement to a deduction or relief.
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