Rental Income Tax Calculator for Landlords

What this landlord tax calculator does

From April 2026, many individual landlords will have to keep digital records and submit quarterly MTD updates for property income. The August MTD Calculator estimates your property profit, taxable income and income tax, shows an indicative MTD start year based on thresholds, and gives example payments on account. Enter your numbers, then click Calculate.

Planning guidance only, this is not tax advice. Always check HMRC rules or speak to a qualified adviser.

How rental income is taxed in the UK

Rental income is taxed as part of your total income in the year it is received. HMRC adds your property profit, gross rent minus allowable expenses, to any other taxable income you have (salary, self-employment, pensions, dividends), and then applies income tax at the relevant rates after your personal allowance. For a full explanation of how this works in practice, see our guide to how rental income is taxed in the UK.

For the 2025/26 tax year, the rates are 20% (basic rate), 40% (higher rate) and 45% (additional rate). The personal allowance is £12,570, though this tapers to zero for total income above £100,000.

The key distinction for landlords with mortgages is that mortgage interest is no longer a deductible expense. Under Section 24, individual landlords receive a basic-rate tax credit of 20% on finance costs instead. This means higher- and additional-rate taxpayers pay more tax on the same rental profit than they did before Section 24 was phased in, the calculator handles this automatically.

Allowable expenses that can still be deducted from rental income before tax include letting agent fees, buildings and contents insurance, maintenance and repairs (not improvements), accountancy fees, ground rent and service charges, and safety certificate costs. For a full list, see our guide to allowable expenses for landlords.

How Section 24, tax bands and payments on account are handled

• Blends property and non-property income (self-employed turnover and other taxable income) to show where you land in the basic, higher and additional tax bands.

• Applies the Section 24 mortgage interest credit (20% tax reducer) correctly, instead of treating interest as a deductible expense.

• Estimates payments on account (illustrative 50/50 split) for cash-flow planning.

• Shows an indicative MTD start year from current government phasing (property + self-employed gross):

  • £50k+ from 2026/27

  • £30k–£49,999 from 2027/28

  • Under £30k: not yet mandated (at time of writing).

• Gives a clean banded tax table you can export to August alongside receipts and statements in the Documents feature.

How Making Tax Digital for landlords works

• You’ll keep digital records and submit quarterly updates of income and expenses for your property business (and any self-employment), plus an End of Period Statement (EOPS) for each business and a Final Declaration after the tax year.

• Thresholds are based on combined gross from property + self-employment. Partnerships and lower thresholds have separate timelines.

• Quarterly updates are summaries, not full tax returns, but keeping clean records all year makes the EOPS simple.

If you want to meet your MTD obligations without managing multiple tools, August's MTD software for landlordshandles digital record-keeping, expense tracking and direct HMRC submission in one place.

What to enter: rental income, expenses and mortgage interest

• Annual gross rent - before expenses.

• Allowable expenses - repairs, insurance, agent fees, etc. (exclude capital items).

• Mortgage interest (annual) - the calculator applies a 20% credit to income tax due.

• Self-employed turnover (non-property) - if you also trade as a sole trader.

• Other taxable income - salary, pensions, dividends (before personal allowances).

• Personal allowance - editable (tapers for higher incomes).

• Tax bands - editable defaults show current thresholds and rates for the year you’re planning.

The Results panel shows Property profit, Taxable income after PA, Income tax before credit, Mortgage interest credit (20%), Estimated tax due, Quarterly MTD update (profit) and illustrative payments on account.

If you are unsure whether your income meets the £50,000 or £30,000 threshold, our MTD guide for landlords explains how qualifying income is calculated and what counts towards it.

Worked example: calculating tax on rental income with Section 24

• Gross rent: £18,000

• Allowable expenses: £6,000

• Mortgage interest: £4,000

• Other taxable income: £25,000

• Self-employed turnover: £0

• Personal allowance: £12,570

The calculator will:

1. Compute property profit = £12,000 (£18k − £6k).

2. Combine with other income, apply personal allowance and tax bands.

3. Work out income tax before credit, then reduce it by 20% × £4,000 = £800 (Section 24).

4. Show estimated tax due and payments on account (illustrative only).

5. Indicate your MTD start year based on combined gross.

Buy-to-let tax: what landlords with mortgages need to know

Buy-to-let tax works differently from other investment income because of Section 24. Before 2017, landlords could deduct mortgage interest from rental income before calculating their tax bill. That relief has been replaced by a basic-rate credit, which means:

• A basic-rate taxpayer with a mortgaged buy-to-let pays broadly the same tax as before.

• A higher-rate taxpayer pays significantly more, because their rental profit is taxed at 40% but the credit only offsets 20% of the interest cost.

• An additional-rate taxpayer is hit hardest, with a 45% rate on profit and only a 20% credit.

The calculator models this correctly. Enter your mortgage interest in the relevant field and it will apply the Section 24 credit to your tax due rather than treating interest as a deductible expense. This is one of the most common errors in buy-to-let tax spreadsheets and manual calculations — and one of the main reasons landlords underestimate their actual tax bill.

If you have been managing your rental tax in a spreadsheet, August's MTD software for landlords is a digital alternative that handles record-keeping, expense tracking and HMRC submission in one place, removing the risk of spreadsheet errors at the point it matters most.

If you are considering whether to hold property personally or through a limited company, our guide to how rental income is taxed in the UK covers both scenarios.

How to use this rental income tax calculator

1. Enter gross rent, allowable expenses, and mortgage interest.

2. Add self-employed turnover (if any) and other taxable income.

3. Confirm personal allowance and tax-band settings for the planning year.

4. Click Calculate to see profit, tax and indicative MTD start year.

MTD for Income Tax Self Assessment begins on 6 April 2026 for landlords earning above £50,000. Our guide to Making Tax Digital for landlords in 2026 covers the quarterly reporting requirements, compatible software and how to prepare. For the broader picture of how rental profits are calculated before they flow into your MTD submissions, our article on allowable expenses for landlords and our guide to how rental income is taxed in the UK are essential reading.

Disclaimer

The Making Tax Digital Landlord Tax Calculator is for general information and planning only. It uses simplified assumptions and editable rates. We can’t guarantee calculations are complete, current, or accurate for every landlord, property, or tax year.

This tool is not tax advice and is not a substitute for HMRC guidance on MTD for Income Tax or MTD for VAT (digital record-keeping, quarterly updates, compatible/bridging software). Outcomes may differ based on your accounting method, VAT status, property income, finance costs, and personal circumstances.

We accept no liability for decisions made using this tool. Always consult HMRC resources or a qualified tax adviser. Obtain professional advice before filing returns, registering for VAT, or making MTD submissions.