Use cases / Mortgage planning
Tax and mortgage planning
Lenders size a mortgage on the income they are willing to count, but you repay it from what is left after tax and National Insurance. Those two numbers can pull in opposite directions, most of all for company directors. Our planner shows both, using assumptions you can edit.
Key figures
| Figure | 2025/26 | 2026/27 |
|---|---|---|
| Standard income multiple in our planner (editable) | 4.5x | 4.5x |
| Personal allowance | £12,570 | £12,570 |
| Basic-rate band (20% on income above the allowance) | £37,700 | £37,700 |
| Mortgage-interest credit for landlords (section 24) | 20% | 20% |
How the rules work
Different incomes are counted differently
Employed: salary plus a share of bonus and overtime, often about half. Self-employed: net profit from up to three years of SA302s, commonly the lower of the average and the latest year. Directors: salary plus dividends, or salary plus a share of company profit, depending on the lender. Contractors: day rate over roughly 46 to 48 weeks. Landlords: rent against an interest cover test rather than income. The planner lets you change every one of these assumptions. Many lenders cap lending at four to five and a half times income; that is a lender rule, not an HMRC rule.
Net income sets the budget
Income tax starts above the £12,570 personal allowance: 20% on the next £37,700, then 40%. Student loan repayments, pension contributions and existing debts also reduce what you can actually pay each month.
Directors: the salary and dividend trade-off
A low salary plus dividends usually minimises tax, but a lender that counts only salary then sees very little income. Our trade-off curve sweeps your salary and shows, at each point, your take-home after corporation tax, employer NI, dividend tax and income tax, next to the income a lender might count. You can see how much take-home a higher counted income costs, and the cheapest salary that reaches a target. Pension contributions and moving from sole trader to company change what lenders see too, and the planner shows how.
Buy-to-let: personal name or limited company
Because mortgage interest on rental property is relieved as a 20% credit rather than deducted from rent, higher-rate landlords bear more tax than the headline rent suggests. A company deducts interest in full but pays corporation tax and then dividend tax on what you take out. The planner compares the two on your numbers, before incorporation costs, and shows the largest interest-only loan your rent could support at 125% or 145% cover.
Stamp duty estimate
The planner gives a Stamp Duty Land Tax estimate for England and Northern Ireland, including the surcharge on an additional property. The rates were checked against GOV.UK on 17 October 2026; the non-resident surcharge and other reliefs are not modelled, so confirm with your solicitor. Scotland (LBTT) and Wales (LTT) have their own taxes, which we do not estimate; use the official calculators.
Evidence and paperwork
Lenders typically ask for two to three years of figures, usually SA302 tax calculations and tax year overviews from HMRC, or accountant-certified accounts. Keeping returns filed and up to date is the single biggest help.
Illustrative planning figures, not mortgage advice or an offer. Lenders vary widely. Check affordability criteria with a regulated adviser or lender.
Work out your own number
- Landlord tax – Rental profit, the section 24 finance-cost credit and your income tax.
- Open the mortgage planner
- Start with a quick estimate and the mortgage card ticked
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.