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Painted house icon for the landlord mortgage interest tax calculator

Free tool for landlords

Landlord mortgage interest tax calculator

Individual landlords can't deduct mortgage interest from rent. Instead they get a tax credit at the basic rate. Enter your figures to see the tax on your rental profit.

Reviewed October 2026

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A worked example

A landlord earns £45,000 a year from a job and lets one home at £1,200 a month (£14,400 a year). Running costs are £2,400 and mortgage interest £6,000 a year.

Worked example of the mortgage interest restriction
Step2026 to 20272027 to 2028, law today
Rent less running costs£12,000£12,000
Income Tax on that profit£3,746£3,986
Finance cost credit (20%, then 22%)−£1,200−£1,320
Tax on the rental profit£2,546£2,666

If the interest could still be deducted like other costs, the 2026 to 2027 tax would be £1,346, so the restriction costs this higher rate taxpayer £1,200 a year. At the 2027 to 2028 rates Budget 2026 announced (24%, 44% and 49%, with a 24% credit), not yet law, the tax would be £2,786.

The rules we use

  • Painted house icon: rates for 2026 to 2027

    Rates for 2026 to 2027

    Personal Allowance £12,570, cut by £1 for every £2 of income over £100,000. Basic rate 20% to £50,270, higher rate 40% to £125,140, then 45%.

    GOV.UK, checked 31 October 2026
  • Painted house icon: the 20% credit

    The 20% credit

    Finance costs are not deducted from rent. You get 20% of the lowest of finance costs, property profits and income above the allowance. Unused costs carry forward.

    HMRC, updated 6 April 2017
  • Painted house icon: from april 2027

    From April 2027

    Property income gets its own rates. In law: 22%, 42% and 47% for 2027 to 2028, with finance cost relief at the property basic rate. Budget 2026 announced 24%, 44% and 49% instead; not yet law.

    Finance Act 2026, section 7

Scotland sets its own Income Tax rates, so this calculator is for taxpayers in England, Wales and Northern Ireland. It is an estimate, not tax advice.

Sources

Common questions

What is the mortgage interest restriction for landlords?
Since 6 April 2020, individual landlords of residential property cannot deduct finance costs such as mortgage interest from their rental income. Instead they get a tax reduction worth the basic rate (20%) of those costs. HMRC phased this in from 6 April 2017. It is often called Section 24.
What counts as finance costs?
HMRC says finance costs include mortgage interest, interest on loans to buy furnishings, and fees for taking out or repaying mortgages or loans.
How is the 20% tax reduction worked out?
It is 20% of the lowest of three figures: your finance costs for the year plus any brought forward, your property profits after any losses brought forward, and your income above the Personal Allowance excluding savings and dividends. It cannot create a refund. If it is limited by profits or income, the unused finance costs carry forward to later years.
What are the Income Tax rates for 2026 to 2027?
The Personal Allowance is £12,570. Basic rate is 20% on £12,571 to £50,270, higher rate 40% on £50,271 to £125,140, and additional rate 45% above £125,140. The allowance goes down by £1 for every £2 of income over £100,000. Scotland has its own rates, so this calculator is for taxpayers in England, Wales and Northern Ireland.
What changes for landlords from April 2027?
From 6 April 2027 property income has its own rates in England, Wales and Northern Ireland. Finance Act 2026, section 7, sets them for 2027 to 2028 at 22% property basic rate, 42% property higher rate and 47% property additional rate, and relief for finance costs is given at the property basic rate, so 22%. Budget 2026 (28 October 2026) announced a rise to 24%, 44% and 49% for the same year, to be legislated in the Finance Bill 2026-27; that is not yet law. The calculator shows both.
Does this apply to landlords who own through a company?
This calculator is for individual landlords. HMRC's policy paper describes the restriction for individuals, including partners and trustees. Ask an accountant about letting through a company.

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