Answers · UK 2025/26

What is the tax on rental income in 2026?

Rental profit is added to your other income and taxed at 20/40/45% for 2026/27. There is a £1,000 property allowance for small amounts. Mortgage interest no longer reduces taxable profit directly — instead you get a 20% tax credit. On £10,000 net rental profit a basic-rate landlord pays about £2,000.

Last updated: 1 June 2026Last reviewed: 1 June 2026How we verify

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Rental income from UK residential property is taxed as part of your total income for 2026/27, after deducting allowable expenses such as letting agent fees, repairs, insurance and Council Tax (when you pay it). The profit is added to your salary or pension and taxed at 20%, 40% or 45%. A £1,000 property allowance lets very small landlords receive up to £1,000 rent tax-free without reporting it. The big change since 2020 is mortgage interest: you can no longer deduct it as an expense. Instead you receive a 20% tax credit on the interest, which hurts higher-rate landlords. Worked example: a basic-rate landlord with £14,400 rent, £4,400 running costs and £3,000 mortgage interest has £10,000 profit before the interest rule. Tax is 20% × £10,000 = £2,000, reduced by a 20% × £3,000 = £600 interest credit, leaving £1,400. A 40% taxpayer would owe 40% × £10,000 = £4,000 minus the same £600 credit = £3,400. Scottish landlords use Scottish Income Tax rates on the profit. Rental profits over £1,000 must be reported via Self Assessment. Use the Rental Income Tax calculator to model your figures.