UK Income Tax Calculator on Landlord Buy-To-Let Property Rental Income

Our free buy to let Rental income tax calculator


Please note that the online calculators may not look right on a mobile device. You are recommended to view the tool on a desktop/laptop.

We have built a rental tax calculator based on you, as a landlord, being:

– A basic rate taxpayer earning less than £50,270 pay 20% income tax on property profits.

– A high-rate taxpayer earning more than £50,270 but less than £124,140. and pay 40% on property profits.

– An additional rate taxpayer is earning more than £125,140 and will pay 45% on property profits.

This is useful for any landlords that have buy-to-let property investments.

Section 24 mortgage interest relief cap means you cannot offset all mortgage interest costs against their rental income. HMRC now add back mortgage interest and finance costs, and you pay tax based on your relevant bandings.

HMRC have provided landlords with relief on mortgage interest at 20%. If you paid mortgage interest costs of £800, you would get a relief of £160 (£800 X 20%). This is irrespective if you are a basic rate, a high rate or an additional rate taxpayer.

Landlords do not need to worry about how to perform these property calculations because our BTL rental tax calculator does the hard work for you.

You can avoid tax if you speak with a specialist like Optimise. You should be investing in rental properties without paying too much to HMRC, don’t you agree?

Here are some of the costs that reduce your HMRC burden

– Letting agent’s fees

– Repairs & maintenance

– Utilities (if you pay for them)

– Council tax (if you pay)

– Mortgage interest (only benefit from a 20% tax reducer)

Use our calculator now to calculate what you need to pay HMRC. It is one thing to earn an income from rent but what is the point if you give it all way to HMRC?

Should you buy a residential buy to let property investment in your name or a limited company?

One of the reasons why property investors use a property company is to save tax. The corporation tax of 19% is less than the basic rate band of 20%, much less than the 40% income band for high-rate taxpayers.

From April 2023, the corporation tax rules change. Any property investment company that makes more than £50,000 in property profits will be put on a sliding scale corporation rate from 19% to 25%.

Any property limited company that makes more than £250,000 on its property rental activities will be subject to 25% corporation tax from April 2023.

Using our free calculator will help you understand what you need to pay HMRC and figure out a way to reduce it. Landlords that calculate their HMRC liability are the same ones that have a plan to reduce it. Ensure the money you collect from rent does not go entirely to HMRC.

Greater interest charges using a mortgage in a limited company

Our mortgage brokers often tell us that it costs landlords a greater mortgage interest rate to use a property investment company than the mortgage interest rate in personal names.

However, we have also heard that mortgage interest rates in Furnished Holiday Lets (FHL) and House of Multiple Occupation (HMO) are similar rates of mortgage interest irrespective if the landlord purchases a buy-to-let in their name or a limited company.

When using the property rental tax calculator, you should understand the mortgage interest rates if you buy in your name or a limited company.

The tool will calculate the mortgage finance interest costs to derive your taxable property profits based on the mortgage entered. Calculate now and then plan to reduce your HMRC liability.

Sadly, letting agents are not equipped to tell you about taxation on your property portfolio but you probably speak with them more than your accountant. Is it not worth speaking with your accountant more often?

One of the issues that the government have not thought about with the Section 24 mortgage interest relief cap is who picks up the cost. We have seen that landlords have increased rent costs for their tenants to make up for the additional amount they pay HMRC. So, has the government been successful in trying to penalise landlords?

Paying income tax on extracting cash out of a limited company

There are many ways to take money out of a property investment company. It would help if you were mindful as a landlord who owns a property investment company that you pay two lots of tax

– Corporation Tax on the property profits made

– Income tax on any wages/dividends/interest that you extract from the property investment limited company

You do not need to worry about the calculations, as we have done the hard work for you with our rent income tax calculator.

Additional costs of running a property investment company

Landlords need to consider the costs of running a rental property investment company. Running a property investment company is not always cheap as you have to pay for additional items

– Increased bookkeeping requirements

– Filing of annual accounts to Companies House

– Filing of annual corporation tax returns to HMRC using the CT600 form

– File ATED reports to HMRC each year

This is on top of the fees you pay to your letting agent.

Use our free landlord tax calculator

You are free to use our calculator to see how much you will pay if owned in your name or a limited company. You can decide whether to purchase a buy-to-let property in a limited company or under your name.

For the most part, we see that those who are basic rate taxpayers keep investing in property in their name. There are very few differences between owning property in their name against owning property inside a limited company.

Please note that this tool may not look right on a mobile device. You are recommended to view this tool on a desktop/laptop.

Go ahead and work out your property tax and then work with a specialist accountant like Optimise to reduce it in the future.

A quick tip: When is the last time you have increased your tenant’s rent? There is a big demand for rental properties and you may be missing out on an opportunity.

 Investing in a UK Buy-To-Let (BTL) property can be a lucrative venture, but landlords should be aware that it comes with tax obligations. Rental income generated from a UK BTL property is subject to taxation, and landlords can efficiently calculate their tax liability using our user-friendly calculator. Stay informed about the tax implications to make the most of your investment in UK property.

What is a Buy-To-Let (BTL) property in the UK, and how does it generate rental income?

BTL property in the UK is one purchased with the intention of renting it out. Rental income is generated when tenants pay regular rent to the property owner, providing a source of income for the landlord.

Are there any implications for UK investors with Buy-To-Let properties, and how can these be calculated?

Yes, UK landlords with BTL properties are subject to taxation on their rental income. To calculate the tax charge, you can use our dedicated calculator, which helps determine the amount owed based on various factors such as rental income and allowable expenses.

What expenses can investors deduct when calculating tax on a Buy-To-Let property in the UK?

You can deduct allowable expenses, such as mortgage interest, property maintenance costs, and letting agent fees. These deductions can help reduce the overall taxable rental income.

Are there any exemptions or relief options available for landlords with Buy-To-Let properties in the UK?

Landlords may be eligible for certain exemptions and reliefs, such as the Private Residence Relief, but it depends on the specific circumstances. Seeking professional advice can help you navigate available options to minimize their tax liabilities.

How can you stay informed about changes in regulations related to UK Buy-To-Let properties?

You can stay informed about changes in regulations by regularly checking official government updates and consulting with professionals. Keeping abreast of any amendments ensures that landlords can adapt their strategies and make informed decisions regarding their Buy-To-Let investments.

Book a call to see how we can help you.

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