This calculator compares the Income Tax on your rental profit in 2026/27 with the tax under the new property income rates that start on 6 April 2027. From 2027/28 property income is taxed at its own rates of 24% (basic), 44% (higher) and 49% (additional), set by Budget 2025 at 22%, 42% and 47% and raised by a further two points at Budget 2026 on 28 October 2026. The tax credit for mortgage interest follows the property basic rate, so it rises from 20% to 24%.
Quick answers
- New rates from 6 April 2027: property income will be taxed at 24%, 44% and 49% in England, Wales and Northern Ireland, according to Budget 2026 Annex A.
- 2026/27: rental profit is still taxed at the main rates of 20%, 40% and 45%.
- Mortgage interest: landlords still cannot deduct residential finance costs; they get a tax reduction at the property basic rate, which will be 24% in 2027/28.
- Order of tax: property income is taxed after employment, trading and pension income, but before savings and dividends.
- Personal allowance: allowances and reliefs are set against non-property income first, so a landlord with a salary usually pays the property rates on all their rental profit.
- Bands do not change: the £12,570 personal allowance and £37,700 basic rate band stay frozen.
How the calculator works
You enter other income, rental profit before finance costs, finance costs and the tax year.
- Other income (salary, pension, trading profit) is taxed first at 20%, 40% and 45%, with the personal allowance set against it first.
- Rental profit is profit after allowable expenses but before mortgage interest. It sits on top of your other income and is taxed at the property rates for the year you choose. Any personal allowance your other income has not used is set against it.
- The personal allowance is tapered by £1 for every £2 of total income over £100,000.
- The finance cost credit is the lower of your finance costs and rental profit, multiplied by 24% for 2027/28 or 20% for 2026/27, and cannot exceed the tax on your property income.
The calculator assumes bands stay at 2026/27 levels and that you have no savings or dividend income.
Worked example
A landlord earns a £30,000 salary, makes £20,000 of rental profit before interest and pays £6,000 of mortgage interest. All the rental profit falls in the basic rate band.
| Line | 2026/27 | 2027/28 |
|---|---|---|
| Tax on salary (£17,430 at 20%) | £3,486 | £3,486 |
| Tax on £20,000 rental profit | £4,000 (20%) | £4,800 (24%) |
| Finance cost credit on £6,000 | minus £1,200 (20%) | minus £1,440 (24%) |
| Tax on property income | £2,800 | £3,360 |
| Total Income Tax | £6,286 | £6,846 |
The landlord pays £560 more in 2027/28. The higher credit offsets part of the rise, because the rate increase applies to profit before interest but the credit only covers the interest.
Why higher rate landlords lose more
The credit stays at the basic rate, so the gap between relief and tax widens for anyone in the higher band.
- Find where your rental profit falls. Add it to your other income. Profit above £50,270 of total income is taxed at 44% from 2027/28.
- Work out the lost relief. A higher rate landlord pays 44% on profit used to pay interest but gets only 24% back, a 20 point gap. That gap is the same as now (40% against 20%), but it applies to a larger tax bill.
- Check for unused finance costs. HMRC limits the credit to the lowest of finance costs, property profits and income above your personal allowance, and carries any excess forward. This calculator does not carry amounts forward between years.
- Plan for the January payment. Payments on account for 2027/28 are based on the 2026/27 bill, so much of the rise falls into the balancing payment due on 31 January 2029.
See section 24 mortgage interest relief for the credit in detail, savings and property income tax in Budget 2026 for the announcement, and Budget 2026 for landlords for the other changes. The rental income tax calculator covers the current year.
Sources
- Budget 2026 Annex A: rates and allowances (HM Treasury)
- Change to tax rates for property, savings and dividend income: technical note (HMRC)
- Income Tax: changes resulting from new savings and property rates (HMRC)
- Restricting finance cost relief for individual landlords: how it is worked out (HMRC)
Frequently asked questions
When do the new property income tax rates start?
On 6 April 2027, for the 2027/28 tax year. Until then rental profit is taxed at the main rates of 20%, 40% and 45%.
Do the new property rates apply in Scotland?
No. HMRC’s technical note says the separate property rates apply in England, Wales and Northern Ireland, and the government will work with the Scottish and Welsh governments so they can set their own property rates.
What rate is the mortgage interest credit from April 2027?
The property basic rate, which will be 24% in 2027/28. It is 20% in 2026/27.
Does the change affect landlords who own through a limited company?
No. Companies pay Corporation Tax on rental profit, and the new rates apply to individual landlords’ Income Tax.
Why does the calculator set the personal allowance against my salary first?
Because the rules say allowances and reliefs are used against non-property, non-savings, non-dividend income first, so a landlord with a salary rarely gets any personal allowance against rent.