How Much Tax Will I Pay on Rental Income in 2025/26?

How rental income is taxed

Rental income is added to your total income and taxed at your marginal rate. LandlordSorted Pro's running tax estimate calculates this live as you log income and expenses throughout the year.

What expenses can you deduct?

LandlordSorted categorises these automatically. Key allowable expenses:

✓Letting agent fees

✓Property repairs and maintenance (not improvements)

✓Buildings and contents insurance

✓Ground rent and service charges

✓Accountancy fees

✓Council tax and utilities if paid by you

✓Replacement of domestic items

Mortgage interest: Section 24

Since April 2020, landlords receive a 20% tax credit on mortgage interest rather than a full deduction. LandlordSorted's running tax estimate calculates this correctly under Section 24 automatically.

A worked example

Annual rent: £18,000. Expenses: £3,200. Mortgage interest: £6,400. Net profit before mortgage relief: £14,800. At 20% basic rate: £2,960 tax minus £1,280 mortgage credit = £1,680 payable. A higher-rate taxpayer pays £5,920 minus £1,280 = £4,640.

How LandlordSorted calculates your estimate

The running tax estimate in LandlordSorted Pro applies your tax band, calculates Section 24 relief correctly, and projects your full-year liability from year-to-date data. Upgrade to Pro for £49/year. Also see how MTD changes your tax reporting and check your MTD wave.

Related on LandlordSorted

→Running tax estimate — see your liability live in LandlordSorted →How to track rental income for HMRC without a spreadsheet →MTD for Landlords: what changes about how you report tax →LandlordSorted Pro — running tax estimate included

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