How Much Tax Do Landlords Pay? Five Worked Examples
No landlord rate exists — profit is taxed at your marginal rate with a 20% mortgage-interest credit. Five landlords on one flat, and every other tax landlords meet.
The short answer
There is no landlord tax rate. Rental profit (rent minus allowable expenses) is added to your other income and taxed at your marginal rate — 20%, 40% or 45% in England, Wales and NI (19–48% in Scotland) — with mortgage interest giving a 20% credit rather than a deduction. From April 2027 rental profit in England & NI moves to 22% / 42% / 47%. Typical outcomes: £1,000–£2,000 on £10,000 of profit depending on your salary.
“How much tax do landlords pay on rental income UK” deserves numbers, not a paragraph about marginal rates. Here are five landlords, computed on 2026/27 rates.
Five landlords, one flat: £12,000 rent, £2,000 expenses, £4,000 mortgage interest
Profit before interest £10,000. Section 24 credit = 20% × £4,000 = £800 (subject to caps).
| Landlord | Tax on the rental profit |
|---|---|
| Retired, no other income | £10,000 sits inside the £12,570 personal allowance → tax £0; credit unused (carried forward) |
| Salary £25,000 (20%) | £10,000 × 20% = £2,000 − £800 = £1,200 |
| Salary £45,000 (straddles 20%/40%) | £5,270 at 20% + £4,730 at 40% = £2,946 − £800 = £2,146 |
| Salary £70,000 (40%) | £10,000 × 40% = £4,000 − £800 = £3,200 |
| Salary £70,000, from April 2027 | £10,000 × 42% = £4,200 − 22% × £4,000 = £880 → £3,320 |
Effective rate on the £8,000 of real profit (after interest): from 0% to 40%. The calculator runs your own salary, Scottish bands and the 2027 preview.
The four things that decide your bill
- Your other income. Rent is stacked on top of salary, pension and self-employment.
- Your expenses. Agent fees, repairs, insurance, certificates — see the complete list.
- Your mortgage. Interest is a 20% credit, not a deduction — a 40% taxpayer effectively gets relief at half their rate.
- Where you live. Scottish residents pay Scottish bands on rent; everyone else pays UK bands (and the 2027 property rates in England & NI).
Other taxes landlords meet
| Event | Tax |
|---|---|
| Buying | SDLT/LBTT/LTT with the additional-dwelling surcharge — calculator |
| Selling | CGT 18%/24% after £3,000, within 60 days — calculator |
| National Insurance | None on rental income — the 2025 Budget rumour was not introduced |
| VAT | None on residential rent |
| Council tax | Tenant’s during a tenancy; yours (and deductible) during voids |
| Licensing | Selective/additional licence fees — deductible — by council |
Reporting
Self assessment (SA105) by 31 January, or quarterly updates under Making Tax Digital if gross income is £50,000+. Gross rent under £1,000 need not be reported at all.
Income tax bands and Section 24 rate from our verified 2026/27 dataset (gov.uk); 2027 property rates gov.uk Budget-2025 measures page; NIC-on-rents not introduced (Budget analyses). Checked 31 Aug 2026.
Quick answers
None of the rent as such — rental profit after expenses is taxed at your marginal rate: 20%, 40% or 45% (19–48% in Scotland). Mortgage interest gives a 20% credit.
£0 with no other income, £2,000 as a basic-rate taxpayer, £4,000 as a higher-rate taxpayer — before the Section 24 credit for any mortgage interest.
No. Rental income is not subject to Class 2 or Class 4 NIC, and the 2025 Budget did not introduce it.
Not in 2026/27. From 6 April 2027 England & NI rental profit is taxed at 22% / 42% / 47% instead of 20/40/45%.