How much tax will you pay on your rent?
A 2026/27 estimate for landlords who own property in their own name, with Scottish rates, the mortgage interest credit and a Making Tax Digital check.
Estimated tax on your rental income, 2026/27
£1,371
- Profit before tax
- £5,500
- Left after tax
- £4,129
- Mortgage interest tax credit (20%)
- £800
- Extra tax from the mortgage interest rules
- £216
You can’t deduct mortgage interest from rental profit. You get a 20% tax credit instead, which costs you £216 more than full relief would.
Making Tax Digital
At £12,000 a year of rent and self-employment income, you’re under the £20,000 threshold, so Making Tax Digital doesn’t apply to you yet.
An estimate for individual landlords, using 2026/27 Scottish income tax bands and the personal allowance. It ignores savings, dividends, student loans, joint ownership and company-owned property. Not tax advice: check with your accountant.
How the calculator works
We take your rent, subtract your allowable expenses, and add the result to your salary or pension. Income tax is worked out with the 2026/27 personal allowance (£12,570, tapering away above £100,000) and either the Scottish bands or the UK bands. Then we take off the mortgage interest credit, worked out as HMRC describes. The figure shown is the extra tax your rental income adds.
It doesn't cover savings or dividend income, student loans, joint ownership, losses or unused interest carried forward, or property owned by a company. Rates checked on 9 November 2026. Not tax advice: your accountant can confirm your figures.
Frequently asked questions
Can landlords deduct mortgage interest?
Not from rental profit, if you own the property personally. Instead you get a tax credit of 20% of the lowest of your mortgage interest, your property profit, and your income above the personal allowance. Higher-rate taxpayers therefore pay more than they would with full relief. Companies are not affected.
Do Scottish landlords pay Scottish income tax on rent?
Yes. If you’re a Scottish taxpayer, your rental profit is taxed at Scottish rates: for 2026/27, 19% starter, 20% basic, 21% intermediate, 42% higher, 45% advanced and 48% top. The mortgage interest credit stays at the UK basic rate of 20%.
When do landlords need Making Tax Digital?
If your gross income from property and self-employment together is more than £50,000, from 6 April 2026; more than £30,000, from 6 April 2027; and more than £20,000, from 6 April 2028. HMRC measures it using your tax return from two years earlier, and counts income before expenses.
Is tax on rental income changing in 2027?
For England, Wales and Northern Ireland, the government has announced separate property income rates of 24%, 44% and 49% from 6 April 2027, subject to the Finance Bill passing, with the mortgage interest credit following the new property basic rate. Scotland can set its own rates and hasn’t yet: the Scottish Budget is due on 3 December 2026.
What is the £1,000 property allowance?
If your gross property income is £1,000 or less in a tax year, it’s tax-free. Above that, you can deduct £1,000 instead of your actual expenses, but not if you also claim the mortgage interest credit.