Answers · UK 2025/26

How much tax will I pay on £30,000 of rental income a year?

It depends on your other income. A basic-rate taxpayer pays 20% on profit, so on £30,000 rent with allowable costs deducted, a £24,000 taxable profit costs £4,800 tax. A higher-rate landlord pays 40% (£9,600); an additional-rate landlord pays 45% (£10,800).

Last updated: 10 July 2026Last reviewed: 10 July 2026How we verify

Full answer

Rental profit is taxed as income on top of your salary, pension or other earnings, at your marginal Income Tax rate. You are taxed on profit, not gross rent, so deduct allowable expenses such as letting agent fees, repairs (not improvements), insurance, ground rent and service charges before applying the rate. Worked example: £30,000 annual rent minus £6,000 of allowable costs leaves £24,000 taxable profit. A basic-rate taxpayer pays 20% = £4,800. A higher-rate taxpayer pays 40% = £9,600. An additional-rate taxpayer pays 45% = £10,800. At this scale of rental income, often from a small portfolio of two or more properties, most landlords who also work will find at least part of the profit pushed into the 40% higher rate once combined with employment income. Mortgage interest is no longer directly deductible from rental profit for individual landlords -- instead you receive only a 20% basic-rate tax credit on interest paid, which is why many landlords with £30,000+ of rental income consider transferring properties into a limited company, where mortgage interest remains a fully deductible expense against Corporation Tax at 19-25% rather than Income Tax at up to 45%, though this triggers Stamp Duty and Capital Gains Tax considerations on the transfer itself. Use the Rental Income Tax calculator and Buy-to-Let calculator to compare personal ownership with a limited company structure.