Buy-to-let tax calculator

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Working out tax on your buy-to-let income

The buy-to-let tax calculator will give you a good indication of the amount of tax you may need to pay on your rental income for the 2016–17 tax year. Checking your tax commitment is a sensible step and especially relevant post the section 24 judicial review update.

Are you up to date on buy-to-let landlord taxation?

George Osborne made a massive change on buy-to-let mortgage interest tax relief which will reduce the allowance to 20% by 2020. 

Learn more about landlord tax. 2015 was an important year for rental property tax issues.

Read more about the potential impact of changes to buy-to-let tax relief from the 2015 Budget.

Using the Landlord tax calculator

First, input your annual rental income.

Next, input any other annual income you receive that is subject to UK tax, as well as any allowable expenses you intend to offset.

Allowable expenses include:

  • Accountancy
  • Agency and solicitor's fees
  • Council tax payments
  • General business expenditures (such as advertising, stationery, telephone calls and travel)
  • Ground rent
  • Landlord’s insurance premiums
  • Maintenance and general repairs
  • Service charges and utility bills

Finally, if you qualify for Married Couple’s Allowance and/or Blind Person’s Allowance, check the corresponding boxes.

Please note that this calculator makes standard assumptions to estimate your tax bill.

Landlord tax after buy-to-let interest relief withdrawal 

Starting in the 2017–18 tax year, HMRC will incrementally restrict tax relief for buy-to-let mortgage interest.

The amount on which you can claim relief will be reduced as follows:

  • 75% in 2017–18
  • 50% in 2018–19
  • 25% in 2019–20
  • 0% in 2020–21 onwards

In its place, individuals will be able to claim a tax reduction, which will be calculated as 20% of the lower of:

  • Finance costs not offset against income in the tax year
  • Total taxable profits of the property business in the tax year*
  • Total income (excluding that from dividends and savings) that exceeds the personal allowance and blind person's allowance (if applicable) in the tax year

Source: www.gov.uk

* If this is the figure used, any excess mortgage interest may be carried forward to the following year

Use the 'tax year' field to get a general indication of the tax impact of the changes to buy-to-let mortgage interest relief in a given tax year.

Please note that this calculator is for guidance purposes only. It does not account for all possible circumstances or future changes in rates and allowances, and is meant to give only a general indication of tax liability now and in future years. For in-depth personal guidance, consult a professional accountant or tax advisor.

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