Landlord Income Tax Calculator

Landlord Income Tax Calculator

This calculator estimates the income tax you owe on rental income under current UK rules. It accounts for the Section 24 mortgage interest restriction, introduced by the Finance (No. 2) Act 2015, which replaced full mortgage interest deductibility with a 20 per cent basic rate tax credit from April 2020. The result shows your estimated tax under current rules alongside what your tax would have been under the pre-2020 rules, so you can see the direct cost of the restriction for your situation.


How to use this tool

  1. Enter your gross annual rental income and your allowable expenses, excluding mortgage interest.
  2. Enter the annual mortgage interest you pay. Do not include capital repayments.
  3. Enter any other income (salary, pension, or other earnings) before tax.
  4. Select the tax year. Your estimated tax due, Section 24 credit, and the pre-2020 comparison will appear below.

Understanding your results

Under current rules, tax is calculated on your rental profit plus other income at your marginal rate. A tax credit worth 20 per cent of your mortgage interest is then subtracted from the tax figure. If you pay income tax at 40 per cent or 45 per cent, this credit covers less of your mortgage interest cost than a full deduction would have done. The gap between what the credit saves you and what a full deduction would have saved is the Section 24 cost.

The pre-2020 rules figure shows what your tax would have been if mortgage interest had remained fully deductible from rental income before tax was calculated. The difference between the two figures is the direct financial cost of Section 24 for your inputs.

If the two figures are the same, you are a basic rate taxpayer. For basic rate taxpayers, the 20 per cent tax credit produces the same saving as a full deduction would have done at the basic rate.

This is an estimate based on the figures you entered. It does not account for all allowable expenses, tax reliefs, or individual circumstances. Consult a qualified tax adviser before making financial decisions.

Save this result — create a free account to save your calculation and access it later.

Legal context

Section 24 of the Finance (No. 2) Act 2015 changed the tax treatment of finance costs for individual residential landlords. The change was phased in between April 2017 and April 2020. From April 2020, individual landlords can no longer deduct mortgage interest and other finance costs from rental income before calculating tax. Instead, they receive a tax credit equal to 20 per cent of those costs. The credit is the same regardless of the landlord’s income tax rate. Section 24 applies to individual landlords. It does not apply to companies holding residential property, to furnished holiday lettings (which have separate rules), or to properties held in certain trust structures. The income tax thresholds used in this calculator apply to England, Wales, and Northern Ireland. Scotland uses different income tax rates and bands, which are not covered here.

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