Answers · UK 2025/26

How much tax will I pay on £8,000 of rental income a year?

It depends on your other income. A basic-rate taxpayer pays 20% on profit, so on £8,000 rent with allowable costs deducted, a £6,000 taxable profit costs £1,200 tax. A higher-rate landlord pays 40% (£2,400); an additional-rate landlord pays 45% (£2,700).

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: £8,000 annual rent minus £2,000 of allowable costs leaves £6,000 taxable profit. A basic-rate taxpayer (total income within the £50,270 higher-rate threshold) pays 20% = £1,200. A higher-rate taxpayer pays 40% = £2,400. An additional-rate taxpayer pays 45% = £2,700. If you claim the £1,000 property allowance instead of itemising expenses (worthwhile if your actual costs are below £1,000), taxable profit would instead be £7,000, giving £1,400, £2,800 or £3,150 tax at the three rates respectively. Mortgage interest is no longer directly deductible from rental profit for individual landlords -- instead you receive a 20% basic-rate tax credit on the interest paid, applied after the tax calculation, which can leave higher-rate landlords worse off than under the old rules. If rental income is your only income and stays below the £12,570 Personal Allowance, you may owe nothing at all. You must report rental income through Self Assessment if your gross rental income exceeds £1,000 in the tax year. Use the Rental Income Tax calculator to model your exact position including mortgage interest relief.