Answers · UK 2025/26

How much tax do I pay on rental income in the UK?

Rental profit (gross rent minus allowable expenses) is added to your other income and taxed at marginal rate: 20%/40%/45%. Mortgage interest is no longer deductible — you get a 20% tax credit instead. £1,000 Property Allowance available for small lettings.

Last updated: 6 April 2025Last reviewed: 6 April 2025How we verify

Full answer

UK rental income tax 2025/26. Step 1: calculate rental profit = gross rent − allowable expenses (letting agent fees, repairs and maintenance, insurance, ground rent, service charges, council tax if covered, professional fees, replacement of domestic items relief). Step 2: NOTE — mortgage interest is no longer deductible (Section 24); instead you get a 20% tax credit on interest paid. Step 3: rental profit is added to your other taxable income and taxed at marginal rate (20% basic, 40% higher, 45% additional). Property Allowance: if gross rental income is below £1,000, no tax/declaration. Above £1,000 you can either deduct actual expenses OR claim the £1,000 allowance (not both). Rent a Room scheme: up to £7,500 tax-free from letting furnished rooms in your only/main home. Reporting: file Self Assessment by 31 January each year (SA105 UK property pages). Furnished Holiday Lets — separate regime ending April 2025 (becoming standard rental rules). Limited company landlords pay 19-25% Corporation Tax on profits — still get full mortgage interest deductibility (popular incorporation route).