Buy to Let Property Tax Calculator

To calculate tax on buy to let income, subtract allowable expenses from your rental income to get your profit. Then apply income tax rates based on your total income. However, since April 2020, Section 24 restricts mortgage interest relief to only a 20% (basic rate) tax credit, significantly affecting higher-rate taxpayers. Use our calculator above to see your exact tax liability for both personal name and limited company structures.

For many buy to let landlords with significant rental income and mortgage interest costs, a limited company structure can be more tax-efficient. Limited companies get full mortgage interest deduction before corporation tax (19-25%), whereas personal landlords are restricted to only a 20% basic rate tax credit under Section 24. However, personal name may be better for lower-income landlords, those planning to sell, or those with minimal mortgage interest.

Section 24 (Finance Act 2015) restricts how much mortgage interest individual landlords can claim. Since April 2020, instead of deducting mortgage interest from rental income, landlords receive only a basic rate (20%) tax credit on their interest payments. This increases tax for basic rate payers and significantly impacts higher/additional rate taxpayers who effectively lose 20-25% of their interest relief compared to the old rules.

For the 2026/27 tax year, Corporation Tax rates for property companies are: Small Profits Rate 19% for profits up to £50,000, Main Rate 25% for profits over £250,000, and Marginal Relief (approximately 26.5%) for profits between £50,001 and £250,000. Most small buy to let SPV companies qualify for the 19% small profits rate.

It depends on your ownership structure. If you hold property personally, you cannot deduct mortgage interest directly - you only receive a 20% basic rate tax credit under Section 24. If you hold property through a limited company, you can deduct mortgage interest in full as a business expense before calculating corporation tax, making it significantly more tax-efficient for properties with mortgages.

Income tax applies to personal landlords at 20-45% on rental profits. Corporation tax applies to limited companies at 19-25% on company profits. Corporation tax is generally lower, and limited companies can deduct full mortgage interest. However, extracting profits from a company requires dividend payments, which are taxed separately at dividend tax rates (8.75% basic, 33.75% higher, 39.35% additional).

Consider a limited company if: your rental profits exceed £30,000 annually, you're a higher/additional rate taxpayer, you have significant mortgage interest costs, you want to retain and reinvest profits, or you need asset protection. Consider personal ownership if: profits are lower, you plan to sell soon, you want simpler accounting, or you're close to retirement. Use our calculator to compare your specific situation.

Yes, selling a buy to let property triggers Capital Gains Tax (CGT). For personal ownership, CGT is 18% (basic rate) or 24% (higher/additional rate). For limited companies, corporation tax applies to gains at 25%. Personal landlords can claim lettings relief (up to £40,000) if the property was let, while limited companies cannot. You can reduce CGT by using your annual CGT allowance of £3,000.