How is rental income taxed in the UK in 2026?

Full answer

Rental income from UK property is taxed as part of your total income for 2026/27. You calculate the profit (rent received minus allowable expenses such as repairs, letting agent fees, insurance, and council tax you pay), then add it to your other taxable income. It is taxed at your marginal rate: 20% basic to GBP 37,700 of taxable income, 40% higher to GBP 125,140, and 45% above, with the GBP 50,270 higher-rate threshold (different bands apply in Scotland). Note mortgage interest is handled separately under Section 24 as a 20% credit, not an expense. Worked example: you receive GBP 15,000 rent and have GBP 3,000 of allowable non-finance expenses, giving GBP 12,000 profit. If your employment already uses your personal allowance and basic band, a higher-rate taxpayer pays 40% on GBP 12,000 = GBP 4,800. A basic-rate taxpayer with room in the band pays 20% = GBP 2,400. There is a GBP 1,000 property allowance: if gross rents are under GBP 1,000 you owe no tax and need not report it; above that you can deduct GBP 1,000 instead of actual expenses if better. Report via Self Assessment. Use the self-employed-tax or buy-to-let calculator to estimate, and confirm allowable expenses on gov.uk.

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