Landlord tax guide UK (2026/27)
Rental profit is added to your other income and taxed at your normal rates, but mortgage interest only gets a 20% tax credit. From 6 April 2027, property income gets its own higher rates: 22%, 42% and 47%.
How rental profit is worked out
- Rental income: rent, plus any other charges you receive from tenants.
- Minus allowable expenses: letting agent and management fees, repairs and maintenance (not improvements), insurance, ground rent and service charges, council tax and bills you pay, accountancy fees, replacing furnishings (replacement of domestic items relief), and travel for the letting business.
- Or use the £1,000 property allowance instead of expenses, which is usually only better on very small rental incomes.
- Mortgage interest isn't deducted. Instead you get a tax credit of 20% of the interest (22% from April 2027), worked out on the lowest of the finance costs, your property profits and your adjusted total income above the Personal Allowance.
Changes from 6 April 2027
Property income gets separate rates: 22% property basic, 42% property higher and 47% property additional (England, Wales and NI). The mortgage interest credit rises to 22%. The £1,000 property allowance and the Rent a Room limit (£7,500) don't change.
Other things landlords need to know
- Register for Self Assessment by 5 October after the tax year if your rental income is over £2,500 (from £1,000 to £2,500, contact HMRC).
- Rent a Room: up to £7,500 a year from a lodger in your own home is tax-free (£3,750 each if you share the income).
- Making Tax Digital: if your combined gross property and self-employment income is over £50,000, you're already in. It's over £30,000 from April 2027. See the MTD guide.
- Selling a rental property: Capital Gains Tax is 18% or 24% on residential property, and you must report and pay within 60 days of completion.
- Renters' Rights Act (England): from 1 May 2026, most tenancies became periodic, rent can only be taken 1 month in advance, and rental bidding is banned.
Sources: GOV.UK: paying tax on rental income, HMRC: property income tax rates from April 2027, property allowance, Rent a Room. The calculator assumes total income under £100,000 and English, Welsh or NI rates. It's a guide, not tax advice.
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How much tax do I pay on rental income in the UK?
Rental profit is added to your other income and taxed at 20%, 40% or 45% in 2026/27. Mortgage interest isn't deducted, but you get a 20% tax credit on it. From 2027/28, property income is taxed at 22%, 42% or 47%.
Can landlords deduct mortgage interest?
Not as an expense, for individual landlords with residential property. Instead you get a tax credit of 20% of the interest (22% from April 2027). Mortgage capital repayments aren't allowable at all.
Do I need to tell HMRC about rental income under £1,000?
No. Gross property income of £1,000 or less is covered by the property allowance and doesn't need to be reported, unless you need a tax return for another reason.
Related calculators & guides
MTD deadline 7 Aug 2027 · First MTD quarterly update · Making Tax Digital for Income Tax · Self-employed tax · Side hustle tax (£1,000 allowance) · Do I need a tax return? · SA deadline countdown · Vinted & eBay HMRC check