Estimate your UK income tax on rental income as a landlord — after allowable expenses and the 20% mortgage interest relief restriction.
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How This Works
From April 2020, landlords can no longer deduct mortgage interest from rental income. Instead, a basic rate (20%) tax credit applies to mortgage interest. This means higher rate taxpayers effectively pay 40% tax on the gross mortgage interest portion. Allowable expenses include agent fees, insurance, repairs, accountancy, utilities you pay, and wear and tear.
Allowable expenses: letting agent fees, buildings and contents insurance, repairs and maintenance (not improvements), mortgage interest (as a 20% credit since 2020, not a deduction), professional fees (accountant, solicitor for tenancy matters), council tax and utilities if you pay them, advertising costs, stationery, travel to the property for management purposes, and a proportion of phone costs. Capital improvements (new kitchen, extension) are NOT allowable expenses but may reduce CGT when you sell.