Use cases / Landlords
Tax for UK landlords
Rental profit is taxed as income at your marginal rate, but mortgage interest is no longer deducted. It is relieved as a basic-rate tax credit instead, which hurts higher-rate landlords most.
Key figures
| Figure | 2025/26 | 2026/27 |
|---|---|---|
| Property allowance (tax-free rental receipts) | £1,000 | £1,000 |
| Section 24 mortgage-interest credit rate | 20% | 20% |
| Rent-a-room limit (sole / shared) | £7,500 / £3,750 | £7,500 / £3,750 |
| Income tax on profit (basic / higher / additional) | 20% / 40% / 45% | 20% / 40% / 45% |
How the rules work
Property allowance
Rental receipts up to £1,000 a year are tax-free. Above that, you may deduct the £1,000 allowance instead of your actual expenses, whichever leaves less profit. You cannot use it with the finance-cost credit, so landlords with a mortgage normally claim actual expenses.
Section 24: mortgage interest
Interest on residential mortgages is not deducted from rent. You instead get a tax reduction worth 20% of the interest, limited to the lowest of the finance costs, the property profit and your income above the personal allowance. A higher-rate landlord therefore relieves interest at 20%, not 40%.
Rent-a-room
If you let furnished space in your own home, the first £7,500 of receipts a year is exempt (£3,750 if the income is shared with someone else). Over the limit you can pay tax on receipts minus the limit, or on receipts minus actual expenses.
Joint ownership
Married couples and civil partners who own a let property jointly are taxed 50:50 on the profit by default, unless they make a declaration of unequal beneficial interests.
Figures are for England, Wales and Northern Ireland taxpayers. Scottish rates and bands differ.
Work out your own number
- Landlord tax – Rental profit, the section 24 finance-cost credit and your income tax.
- Rent-a-room relief – Lodger income: is it under the £7,500 limit?
Then sign up free to save the result and see how to lower your bill.
HMRC and GOV.UK sources
Related
General information for UK taxpayers, not personal tax advice. Figures reflect the 2025/26 and 2026/27 tax years and are checked against the same rules our calculators use.