Rental yield calculator
Gross yield, net yield after voids and every running cost, and the return on the cash you actually committed — with the income tax worked out under the finance cost restriction, which is what decides whether a mortgaged property makes money at all.
Calculator
The yield figures below are a percentage of this. Use the purchase price if you are working out whether to buy, and today’s value if you already own it — they answer different questions and the second one falls as prices rise.
The rent the tenant pays, per calendar month, before anything is taken out of it.
Between tenancies, and while a repair is being done. Two to four weeks is a common allowance; setting it to zero assumes the property is never empty, not even for a changeover.
A percentage of the rent collected, so the agent takes nothing while the property is empty. Set it to 0% if you manage the property yourself — which is a real saving and also a real job.
Conveyancing, survey, mortgage arrangement, and anything spent making the property lettable — but not the purchase tax, which is worked out separately below so it cannot be counted twice. None of this changes the yield, which is measured against the property’s value, but it is money you committed, so it changes the return on your cash.
Purchase tax follows the property, not the buyer. This is a different question from the tax year and region above, which follow you: a Scottish landlord buying an English flat pays Stamp Duty Land Tax on the purchase and Scottish income tax on the rent.
The surcharge on an additional property is the largest single line on this page. All three jurisdictions charge it, and all three charge it differently.
England and Northern Ireland add a further surcharge for a buyer who has not been in the UK for at least 183 days in the year before the purchase. Scotland and Wales do not levy one.
Choose your own figure if a relief applies. This calculation covers an ordinary purchase of one residential property and nothing else — first-time buyer relief, a replacement main residence, a company or trust purchase and multiple dwellings relief all change it, and the full list is beside the figure in the breakdown.
Leasehold flats only. It is the cost most often left out of a yield calculation and it is rarely small — and a major works bill is on top of it.
Leasehold flats only, and zero on most newer leases.
Landlord buildings and liability cover. On a leasehold flat the buildings insurance is often inside the service charge already — do not count it twice.
Gas safety, electrical checks, the boiler, redecoration between tenancies. It averages out over years rather than arriving evenly, which is why a single good year makes a yield look better than it is.
The amount borrowed against this property. Interest-only is assumed, which is what almost every buy-to-let mortgage is. Set it to 0 for a cash purchase.
The rate on the balance above. This is the figure Section 24 changed the treatment of, and it is why the tax below is not simply a rate applied to your profit.
Salary, pension, self-employed profit — everything except this property. Rental profit is stacked on top of it, so this is what decides the rate the profit meets. It changes the answer more than any other field here.
Income tax on rental profit is devolved, so a Scottish landlord meets Scottish rates on it. Where the property is does not matter for income tax; where you live does.
Income tax only. There is no National Insurance on rental profit from an ordinary property letting, and none is added here. Stamp duty, capital gains tax on a sale, and the extra costs of a furnished holiday let or a company structure are all outside this page — see the limitations beside the answer.
On these figures the property is worth £250,000 and collects £14,423.08 of rent in a year after 2 weeks empty.
Every calculation runs in your browser. There is no application server and no database, so nothing you type is transmitted or stored. A share link is the exception: it carries your figures in the URL. What that means.
Gross yield, net yield, and what is left after tax
Gross yield 6.00%. Net yield 4.21%.
The gross figure is the £15,000.00 of rent the property is advertised at, over the £250,000 it is worth. The net figure is the same denominator with £3,892.31 of running costs and £576.92 of empty weeks taken off the top — 1.79% of the property’s value, gone before a penny of mortgage or tax.
Both figures are measured against what the property is worth, deliberately, so the only difference between them is the costs. Neither has anything to do with a mortgage: a yield is a property of the asset, and borrowing does not change what the bricks earn. What borrowing changes is the return on your own money, which is further down and is a different figure with a different denominator.
Where the rent goes
Rent advertised at the top, the profit the tax system will charge you on at the bottom. The letting agent’s fee is taken from rent collected rather than rent advertised, because an agent takes nothing while the property is empty.
| Rent, twelve months | £15,000.00 |
|---|---|
| Empty for 2 weeks | −£576.92 |
| Rent actually collected | £14,423.08 |
| Letting agent | −£1,442.31 |
| Service charge | −£1,200.00 |
| Ground rent | −£250.00 |
| Insurance | −£250.00 |
| Maintenance and repairs | −£750.00 |
| Profit before finance costs and tax | £10,530.77 |
The mortgage interest is not in this table. That is not a presentational choice: since 6 April 2020 finance costs on a residential letting are not deductible from rental income at all, so the figure at the bottom is the profit the tax is charged on even though it is not money you keep. The interest reappears twice below — once as cash leaving your account, and once as a tax reducer.
The return on your own money
Not a yield. This is the cash the property produces in a year over the cash you actually put into it — the deposit, plus the buying costs, which are real money committed and never appear in a yield.
| Profit before finance costs and tax | £10,530.77 |
|---|---|
| Mortgage interest | −£9,843.75 |
| Cash flow before tax | £687.02 |
| Income tax the property causes | −£2,189.56 |
| Cash flow after tax | -£1,502.54 |
| Cash you put in — including £15,000.00 of Stamp Duty Land Tax | £80,500.00 |
| Return on that cash, after tax | -1.87% |
Before tax the return on your cash is 0.85%. The gap between that and the figure above is the income tax, and on a mortgaged property it is larger than a reader who has not met Section 24 would expect.
This property makes money before tax and loses money after it. It collects £687.02 of cash in a year and the income tax on it is £2,189.56, which is more. That is not an error in the arithmetic and it is not unusual: it is what happens when a higher-rate taxpayer’s mortgage interest is added back to their taxable income and relieved at the basic rate instead. The panel below shows exactly where the difference comes from.
Stamp Duty Land Tax on the purchase
£15,000.00 on a £250,000 purchase — an effective rate of 6.00% of the price. These rates have applied since 2025-04-01.
| Slice of the price | Amount | Rate | Tax |
|---|---|---|---|
| Above £0 | £125,000.00 | 5.00% | £6,250.00 |
| Above £125,000 | £125,000.00 | 7.00% | £8,750.00 |
| Total | £15,000.00 | ||
The surcharge on an additional property is charged differently in each jurisdiction, and this is the one that applies here. England and Northern Ireland add five percentage points to every band, the nil-rate band included — so an additional property is taxed from the first pound where an only home is not.
What this figure does not include
- First-time buyer relief, which raises or removes the nil-rate band in all three jurisdictions.
- Replacement of a main residence, and the refund of a surcharge already paid when the old home sells within the time limit.
- Purchases by companies, trusts and partnerships, which are charged differently and can meet a flat higher rate.
- Multiple dwellings relief and the other statutory reliefs.
- Mixed-use and non-residential property, which uses a different rate table entirely.
- Leasehold premiums and the tax on rent under a new lease.
- Linked transactions, where two or more purchases between the same parties are taxed as one.
- Buying six or more dwellings in a single transaction, which may be treated as non-residential.
- Shared ownership, staircasing and any election made on a first purchase.
Any of these changes the answer, and only you know which applies. Use the official calculator for the country the property is in and enter your own figure above if one does.
What the published figures say about an area
The rent and the property value above are yours, and this calculator takes both as given. These are what two government publishers report for a whole area, so you can see whether your own figures sit where you expected. Nothing here changes anything above.
Local authorities, regions and countries — the geographies the publishers use. There is no postcode lookup, because UK-wide postcode data carries licensing conditions this site does not hold.
Nothing is shown until you choose an area. Your figures above are unaffected either way.
Why the tax is that much: the finance cost restriction
Mortgage interest on a residential letting is not deducted from your rental income. Instead you get a tax reducer — a fixed amount taken off your income tax bill, worked out at the basic rate rather than at yours. The interest still leaves your bank account either way; what changed is that it now passes through your taxable income on the way.
| Your finance costs | £9,843.75 |
|---|---|
| Your property business profits | £10,530.77 |
| Your income above the personal allowance | £47,960.77 |
| The lowest of the three | £9,843.75 |
| Tax reducer, at 20.00% | £1,968.75 |
Here the reducer is limited by your finance costs.
| Income tax on this property | Amount |
|---|---|
| If the interest were still deductible | £220.81 |
| As it is charged now | £2,189.56 |
| What the restriction costs you a year | £1,968.75 |
Both rows come from the same tax engine, run on the same landlord: one with the interest taken off the profit before it was declared, one with the interest added back and a reducer applied. Nothing on this page multiplies a profit by a tax rate. The cost is not the whole of the interest, and it is not a fixed percentage of it either — it is the difference between two whole tax calculations, which is why it moves when your other income does.
Your next £100 of profit, and your next rent rise
Another £100 of property profit costs £40.00 in income tax. This is measured, not looked up. The tax engine reports a marginal rate of its own, and it is worked out on income before the finance cost reducer is applied — on this page that answers a slightly different question, and here the two happen to agree.
Your reducer is already limited by your finance costs, so it does not move when your profit does — the whole of the next £100 meets your marginal rate. Increase the mortgage until your interest is larger than your profit and the two figures separate.
Putting the rent up by £10 a month is £120 a year on the advertisement, and £62.31 of it reaches you. The void takes a share before the agent does, the agent takes a share of what is left, and the tax takes a share of that. It is worth knowing which of the three is the largest before deciding that a rent rise is the answer.
Another £64,609 of income of any kind takes you into the Additional rate band. The calculation measures that gap as £77,179 of taxable income, which is a different figure. Above £100,000 every £2 of income also withdraws £1 of personal allowance, so the gap closes faster than it looks — and under the finance cost restriction your mortgage interest counts towards reaching it.
The same property, with more and less borrowed against it
£250,000 of property, the same rent and the same costs, at 5.25% interest, for a landlord with £50,000 of other income in England or Northern Ireland. Read the last column downwards.
| Borrowed | Your cash in | Cash flow before tax | Cash flow after tax | Return on your cash |
|---|---|---|---|---|
| 0%£0 | £268,000 | £10,530.77 | £6,372.46 | 2.38% |
| 25%£62,500 | £205,500 | £7,249.52 | £3,747.46 | 1.82% |
| 50%£125,000 | £143,000 | £3,968.27 | £1,122.46 | 0.78% |
| 75%£187,500 | £80,500 | £687.02 | -£1,502.54 | -1.87% |
| 85%£212,500 | £55,500 | -£625.48 | -£2,677.64 | -4.82% |
Borrowing more still buys more property per pound of your own money, and it still magnifies any capital gain — which this page does not model at all. What it no longer reliably does is improve the income return, because the interest is added back to your taxable income before the reducer is applied. Where the last column turns depends on your other income, not on the property, which is why the table is computed beside your own figures rather than quoted from an article.
What changes for property income on 6 April 2027
From 6 April 2027 property income stops being taxed on the same rate schedule as employment and pension income and gets its own set of rates. The order income is taxed in changes with it: property income will sit above other income and below savings interest and dividends, rather than being pooled with other income as it is now. Announced at Budget 2025 and set out in HMRC’s technical note.
No tax year this calculator offers reaches that date, so nothing above reflects it. The latest year here is 2026/27. A purchase being considered now is a long-lived commitment, and the tax on its income is scheduled to change — so the figures on this page are right for the years they name and are not a guide to the years after them. gov.uk sets out the change.
Seven things these figures do not know
The purchase tax is worked out, but only for an ordinary purchase
Stamp Duty Land Tax, Land and Buildings Transaction Tax and Land Transaction Tax are all calculated here, including the surcharge on an additional property — which the three jurisdictions charge by three different mechanisms, shown above. What is not covered is every case that is not an ordinary purchase of one residential property: first-time buyer relief, a replacement main residence and the refund that follows it, a company or trust buyer, multiple dwellings relief, mixed use, leases, and linked transactions. The full list sits beside the figure, and there is a box to enter your own answer if one of them applies.
It does not model capital gains tax, or any capital growth at all
Nothing here assumes the property rises or falls in value, and nothing here prices the tax on selling it. Residential property has its own capital gains tax rates, a disposal must be reported and paid within a short window rather than through the ordinary self-assessment cycle, and a leveraged purchase magnifies a capital gain and a capital loss alike. This page is about the income only; the capital gains tax calculator is where a disposal belongs.
The mortgage is interest-only, and the balance never moves
Almost every buy-to-let mortgage is interest-only, which is why that is what is modelled — but a repayment mortgage pays capital as well, and the capital element is not an expense and gets no relief of any kind. This page would understate the cash leaving your account and overstate the return. It also assumes the rate holds for the year; the mortgage overpayment calculator owns amortisation and is the page for a schedule.
It is one property, one year, and no unrelieved amounts carried in or out
A property business is assessed as a whole, so a second property’s profit or loss changes this answer. Losses are carried forward against the same business’s later profits and are not modelled here, and neither is unrelieved finance cost brought forward from an earlier year — which is exactly what a landlord capped by their profits accumulates. Both would reduce a future bill and neither reduces this one.
It assumes you own the property personally, and only you
A property held through a limited company is taxed completely differently: the company pays corporation tax, mortgage interest is an ordinary deductible expense with no restriction at all, and getting the money out is a second tax event. Corporation tax and the salary and dividend calculator price that route, and the comparison between the two is not made here. Jointly held property, a furnished holiday let and rent-a-room relief all have their own rules and none is modelled.
It knows only the income you told it about
Your other income is £50,000, and it is treated as income taxed on the same schedule as a salary. Savings interest and dividends are not asked for, so the cap on the finance cost reducer that depends on them is measured slightly high; the property allowance, capital allowances on plant, the replacement of domestic items relief, the high income child benefit charge and student loan repayments are not modelled at all. Pension contributions are not modelled either, and relief at source is one of the few things that genuinely reduces a landlord’s bill — so the tax here is too high for anyone relying on it.
A yield is arithmetic, and a tenancy is not
The rent is what you told the page, not what the property will let for; the void allowance is a guess about the future; and maintenance averages out over years rather than arriving evenly, so a single good year makes any of these figures look better than the decade will. Rent arrears, a tenant who will not leave, a service charge that doubles and a major works bill are all real and none of them is a percentage. This page recommends no property, no area, no lender and no letting agent, and it never will.
Worked example: one flat, two landlords, two different answers
The same flat, the same mortgage, the same tenant — and the finance cost restriction costs one owner £0.00 a year and the other £1,968.75. Nothing about the property differs. The only thing that differs is what each of them already earns, and that is the answer to almost every question on this page.
Both own a £250,000 flat let at £1,250 a month, with £187,500 borrowed against it at 5.25%. After 2 weeks empty, a letting agent, a service charge, ground rent, insurance and maintenance, the flat produces £10,530.77 of profit before finance costs — a 6.00% gross yield and a 4.21% net one. The mortgage takes £9,843.75 of it, leaving £687.02 of cash before tax.
Ade earns £30,000. Adding the flat’s £10,530.77 of profit to that leaves them inside the basic rate, and relief at the basic rate is exactly the relief a deduction would have given — so the restriction costs them £0.00. Their income tax on the property is £137.40 and they keep £549.62 of cash.
Marta earns £60,000. The same profit lands on top of a higher-rate income, so it is charged at the higher rate while the interest is relieved at the basic rate — the gap between the two is the whole of the restriction. Their income tax on the property is £2,243.56, which is £1,968.75 more than the £274.81 they would have paid when the interest was deductible — and it is more than the £687.02 the flat produces, so their cash flow after tax is -£1,556.54.
| Figure | Ade, £30,000 | Marta, £60,000 |
|---|---|---|
| Gross yield | 6.00% | 6.00% |
| Net yield | 4.21% | 4.21% |
| Cash flow before tax | £687.02 | £687.02 |
| Income tax on the property | £137.40 | £2,243.56 |
| Tax if the interest were deductible | £137.40 | £274.81 |
| Cost of the restriction | £0.00 | £1,968.75 |
| Cash flow after tax | £549.62 | -£1,556.54 |
| Return on their own cash, after tax | 0.68% | -1.93% |
The two gross yields are identical, because a gross yield knows nothing about the owner. The two after-tax returns are on opposite sides of zero. That is the distance between the number on the advertisement and the number that decides whether the property is worth buying, and no yield figure of any kind can close it on its own.
When the relief itself is capped
The reducer is the basic rate on the lowest of three figures, and one of them is the property’s own profit. Borrow £225,000 against the same flat instead of £187,500 and the interest becomes £11,812.50 — more than the £10,530.77 of profit. The reducer is then worked out on the profit rather than on the interest, so £1,281.73 of interest gets no relief at all this year and is carried forward instead.
It has a second effect that is easy to miss and useful to know: while the profit is the binding cap, another £100 of profit brings £100 of previously unrelieved interest back into relief along with it. The income tax on that £100 is £20.00 rather than the £40.00 the rate table alone would suggest. The calculator measures it rather than quoting a rate, because there is no published rate that describes it.
Methodology and sources
This calculator answers three questions that are usually collapsed into one: what the property earns against its value, what it earns after the cost of owning it, and what it earns on the money you actually put in. The first two are yields and share a denominator. The third is not a yield, has a different denominator, and is the only one a mortgage changes.
Everything on the page is one tax year, on figures you supplied. Nothing is projected forward: there is no rent growth, no house price growth and no term anywhere in the model, so there is no assumption compounding and nothing to disclaim as a forecast. What there is instead is statutory tax treatment, and that is where the stamp further down applies.
The two yields, and why they share a denominator
rent collected = annual rent × (52 − void weeks) ÷ 52
running costs = agent's fee (a share of rent COLLECTED) + service charge
+ ground rent + insurance + maintenance
profit = rent collected − running costs
gross yield = annual rent ÷ property value
net yield = profit ÷ property valueBoth are measured against what the property is worth, so the entire gap between them is the cost of ownership. Many calculators put the purchase price plus the buying costs under the net figure, which is defensible on its own terms and makes the two numbers non-comparable: the fall from one to the other is then partly costs and partly a bigger denominator, and the reader cannot tell how much of it is which. The buying costs are not discarded — they appear under the return on your own cash, where the money actually went.
The agent’s fee is charged on rent collected rather than rent advertised, because an agent takes nothing while the property is empty. Charging it on the annual figure overstates the cost by the fee percentage of the void every time, and makes a longer void look more expensive than it is.
The return on your own cash, which is not a yield
finance costs = mortgage balance × interest rate (interest-only)
cash invested = property value + buying costs − mortgage
cash flow before tax = profit − finance costs
cash flow after tax = cash flow before tax − income tax on the property
return on cash = cash flow after tax ÷ cash investedA yield is a property of the asset and does not move when you borrow against it. This figure is a property of your position, and it is the one a purchase decision turns on. The page keeps the two apart and never calls this one a yield, because reporting a leveraged cash-on-cash return under the word “yield” is the single commonest error in this category and it always flatters the borrowed case.
When the mortgage covers the whole price and the buying costs there is no cash invested, and the page says there is no return to express rather than dividing by zero and reporting an infinite one.
The finance cost restriction, in the order the statute applies it
Since 6 April 2020 finance costs on a residential property let by an individual are not deductible from rental income (ITTOIA 2005 s.272A). Relief is given instead as a tax reducer at the basic rate, computed on the lowest of three figures (ITA 2007 s.274A and s.274AA):
relief base = min( finance costs,
property business profits,
adjusted total income )
reducer = basic rate × relief base
liability = income tax on (other income + property profit) − reducerThe profit the tax is charged on therefore includes the mortgage interest. That is the whole change, and its consequences run further than the bill: taxable income is higher by the interest, which can move a landlord into a higher band, start withdrawing their personal allowance above £100,000, or take them over a threshold for a charge this page does not model.
Adjusted total income is total income less savings and dividend income and less the allowances the individual is entitled to. This page has no savings or dividend input, so it is taken as the sum of the tax engine’s own band amounts — total income less the personal allowance actually available at that income. For a reader who also has savings interest or dividends the figure would be slightly high; it is very rarely the binding cap, and it is listed in the limitations.
Where the property profits cap binds — a landlord whose interest bill has overtaken their profit, which a rate rise alone can cause — part of the interest gets no relief at all in that year. HMRC carries the unrelieved amount forward against later profits of the same property business. This calculator does not carry it forward, in either direction, and says so beside the answer.
Why the reducer is read at one rate for every region
ITA 2007 s.274A gives the relief at the basic rate. The figure used here is read out of the rate schedule for England, Wales and Northern Ireland — currently 20.00% — rather than out of the Scottish schedule, and it is found by the name the rules files themselves use for that band rather than by a string typed into this page.
Income tax on the rental profit itself is devolved, and a Scottish landlord meets Scottish rates on it here, through the tax engine, exactly as they would on a salary. It is only the reducer that is taken at a single rate. That simplification is safe while the band of the same name carries the same rate in both schedules — which it does in every tax year this software models — and test/rentalYieldCalculator.test.tsx asserts it for every year and every region, so the day the two diverge is a failing build rather than a silently wrong answer for a Scottish landlord.
Why nothing here multiplies a profit by a tax rate
Every tax figure on the page is the income tax engine run twice and subtracted: once with the property profit in the reader’s income and once without it. That is the pattern tax-core prescribes, and it is the only way to get a figure that respects the statutory stacking order, the allowance allocation of ITA 2007 s.25(2) and the personal allowance taper — all three of which make the cost of a slice of income a property of the taxpayer rather than of the slice.
The comparison with the old treatment is a third run of the same engine, on the same landlord, with the interest deducted from the profit before it was declared and no reducer anywhere. On the calculator’s own property that costs a landlord earning £30,000 exactly £0.00 and one earning £60,000 £1,968.75 a year. Neither figure is a percentage of anything; both are the difference between two whole tax calculations.
The rate on the next pound, measured rather than read off the engine
computeTaxPosition returns a marginal rate, measured by a forward difference on earned income. Rental profit is non-savings non-dividend income, so unusually for this site the engine’s figure is at least on the right rate schedule — and it is still the wrong answer here, because it is computed before the tax reducer.
While property profits are the binding cap, another pound of profit brings a pound of previously unrelieved interest back into relief with it, so the tax on the next pound is the marginal rate less the basic rate. Once finance costs are the binding cap the reducer stops moving and the two figures agree again. The page therefore measures the next £100 through the whole of the arithmetic above, and shows the engine-shaped figure beside it whenever they differ.
The rent-rise figure is measured end to end for the same reason. Between a £10-a-month rise and the landlord’s pocket sit the void they still lose, the agent’s share of what is collected, and the tax — and no single rate accounts for all three.
Rates, thresholds and allowances
| Figure | 2025/26 | 2026/27 |
|---|---|---|
| Personal allowance | £12,570 | £12,570 |
| Personal allowance taper starts at | £100,000 | £100,000 |
| Allowance withdrawn | £1 per £2 of income | £1 per £2 of income |
| Property and other income — England, Wales and Northern Ireland | Basic rate 20.00% from £0; Higher rate 40.00% from £37,700; Additional rate 45.00% from £125,140 | Basic rate 20.00% from £0; Higher rate 40.00% from £37,700; Additional rate 45.00% from £125,140 |
| Property and other income — Scotland | Starter rate 19.00% from £0; Basic rate 20.00% from £2,827; Intermediate rate 21.00% from £14,921; Higher rate 42.00% from £31,092; Advanced rate 45.00% from £62,430; Top rate 48.00% from £125,140 | Starter rate 19.00% from £0; Basic rate 20.00% from £3,967; Intermediate rate 21.00% from £16,956; Higher rate 42.00% from £31,092; Advanced rate 45.00% from £62,430; Top rate 48.00% from £125,140 |
| Basic rate, at which the finance cost reducer is given | 20.00% | 20.00% |
Thresholds are taxable income, after allowances. There is no National Insurance on rental profit from an ordinary property letting, so none of the National Insurance figures in the rules files are used by this page at all.
The published area figures, and the division they are not
The two numbers this calculator cannot check are the two you type: the rent and the property value. The optional panel in the breakdown is what they can be checked against — the Office for National Statistics’ median monthly rent and HM Land Registry’s average sale price, for whichever area you choose. Neither is used in any calculation on this page, neither is written into any field, and the panel shows nothing until you pick an area.
The two figures are deliberately not divided into a yield. It would be one line of arithmetic on a page about yield, and it would be wrong. ONS publishes a median rent — the middle of the rents in an area. Land Registry publishes a mix-adjusted average price, produced by a statistical model of a representative property rather than by taking a middle. One divided by the other is neither the median yield in the area nor the average of the yields in it, and it is the yield of no property that exists — while looking authoritative, because it is two official numbers and one division. Your own two figures describe one property and do divide, which is what the rest of this page is about.
Three gaps in the published data are the publishers’ rather than this page’s, and the panel names each where it bites. Northern Ireland has no rent figure for the latest two months. Scotland’s rents are reported for eighteen Broad Rental Market Areas, which span more than one council, while its prices are reported by council — so those areas carry a rent and no price, and nothing here apportions one into the other. And Land Registry runs about a month behind ONS, so the two halves are usually different months; both dates are shown rather than one standing for both.
The area is chosen from a list rather than looked up from a postcode. A UK-wide postcode lookup needs Northern Ireland postcode data, which carries separate commercial-licensing conditions this site does not hold. Both series are provisional and are restated as later data arrives. The rent series is official statistics in development, a lower status than the rest of the published figures this site uses. An area figure describes every property of its kind across a whole area and is not a valuation of any particular one.
Sources
- ONS — Price Index of Private Rents, UK: monthly price statisticsThe median monthly rent in the optional area panel. Official statistics in development, provisional, and used in no calculation on this page.
- HM Land Registry — UK House Price IndexThe average property price in the optional area panel. A mix-adjusted average from a statistical model, not a valuation, provisional, and used in no calculation on this page.
- gov.uk — Work out your rental income when you let propertyWhat counts as rental income, which expenses are allowable, and that property losses are carried forward against future profits of the same property business rather than set against other income.
- gov.uk — Tax relief for residential landlords: how it’s worked outThe finance cost restriction itself, and the three-way cap — finance costs, property business profits, and adjusted total income — that decides what the basic-rate reducer is computed on.
- HMRC Property Income Manual — PIM2054, finance costsHMRC’s own statement of the restriction, the carry-forward of unrelieved finance costs, and the statutory references in ITTOIA 2005 s.272A and ITA 2007 s.274A.
- gov.uk — Income tax rates and allowances: current and pastThe personal allowance, its taper, and the bands the property profit is stacked against. Also the source of the basic rate the reducer is given at.
- gov.scot — Scottish income tax rates and bandsIncome tax on rental profit is devolved, so a landlord living in Scotland meets these rates on it — wherever the property is.
- gov.uk — Change to tax rates for property, savings and dividend incomeThe separate rate schedule and separate place in the stacking order that property income takes from 6 April 2027. Outside every tax year this calculator offers.
The rates, thresholds and allowances used by this calculator were verified against gov.uk on . That covers the published rates, thresholds and allowances this page calculates with. It does not verify any figure the page produces for you: that is arithmetic on verified inputs. Parts of the engine behind it are checked against HMRC’s own published worked examples, which tests the method on a small number of scenarios rather than your answer, and most of the test suite derives its expected values by hand. That check was carried out automatically and no named person has signed it off yet.
| Figures covered | Verified on | Verified by | Human sign-off |
|---|---|---|---|
| 2025-26 | 2026-08-12 | Automated verification (Claude Opus 5) | not yet signed off |
| 2026-27 | 2026-08-12 | Automated verification (Claude Opus 5) | not yet signed off |
| 2020-21 to 2024-25 — pension annual allowance only | 2026-08-12 | Automated verification (Claude Opus 5) | not yet signed off |
| 2025-26 and 2026-27 — share identification window only | 2026-08-13 | Automated verification (Claude Opus 5) | not yet signed off |
| 2025-26 and 2026-27 — pension relief at source only | 2026-08-13 | Automated verification (Claude Opus 5) | not yet signed off |
| 2025-26 and 2026-27 — inheritance tax only | 2026-08-13 | Automated verification (Claude Opus 5) | not yet signed off |
| 2025-26 and 2026-27 — family tax, LISA and pension-access additions | 2026-08-13 | Automated verification (Codex) | not yet signed off |
| 2025-26 and 2026-27 — student loan deductions only | 2026-08-18 | Automated verification (Claude Opus 5) | not yet signed off |
| 2025-26 and 2026-27 — property acquisition tax only | 2026-08-18 | Automated verification (Claude Opus 5) | not yet signed off |
| 2025-26 and 2026-27 — automatic enrolment only | 2026-08-18 | Automated verification (Claude Opus 5) | not yet signed off |
| 2025-26 and 2026-27 — State Pension age and rates only | 2026-08-18 | Automated verification (Claude Opus 5) | not yet signed off |
The log covers the rules directory, not only this calculator. 8 rows are deliberately narrow — 2020-21 to 2024-25 — pension annual allowance only; 2025-26 and 2026-27 — share identification window only; 2025-26 and 2026-27 — pension relief at source only; 2025-26 and 2026-27 — inheritance tax only; 2025-26 and 2026-27 — student loan deductions only; 2025-26 and 2026-27 — property acquisition tax only; 2025-26 and 2026-27 — automatic enrolment only; 2025-26 and 2026-27 — State Pension age and rates only — and they verify the figures named there and nothing else. Those tax years are not modelled by any calculator on this site: the years this page can compute are the ones its tax-year selector offers, and no others.
A verification goes stale the moment one of its sources is updated past the date above. If a source below carries a later date than this stamp, trust the source.
Rates, thresholds and allowances on this page are taken from material published by HM Revenue & Customs and the Scottish Government. Contains public sector information licensed under the Open Government Licence v3.0.
A dated change this page does not model
From 6 April 2027 property income gets its own rate schedule, separate from the schedule it currently shares with employment and pension income, and its own place in the order income is taxed in — above other income, below savings interest and dividends. It was announced at Budget 2025 and set out in HMRC’s technical note, linked in the sources above.
No tax year this calculator offers reaches that date, so nothing it computes reflects the change, and the rates themselves are deliberately not reproduced here: they are not in any rules file this page can read, and a figure typed into copy is wrong from the moment it moves with nothing to catch it. What is recorded here is the date, the fact and the source. The same change is logged in packages/tax-core/VERIFICATION.md, which sets out what it breaks in the software rather than on the page.
Seven things this calculation does not model
- Reliefs from the purchase tax. The tax itself is calculated — Stamp Duty Land Tax, Land and Buildings Transaction Tax or Land Transaction Tax, with the surcharge on an additional property — for an ordinary purchase of one residential property. First-time buyer relief, replacement of a main residence and the refund that follows it, purchases by companies and trusts, multiple dwellings relief, mixed use, leases and linked transactions are not modelled. Each is listed beside the figure on the page, and the reader can substitute their own.
- Capital growth and capital gains tax. No house price assumption exists anywhere in the model, and nothing prices the tax on a sale. Residential property has its own capital gains rates and its own short reporting and payment window.
- Anything but an interest-only mortgage. The balance never changes and the rate holds for the year. A repayment mortgage also pays capital, which is not an expense and attracts no relief of any kind.
- Losses and unrelieved finance costs, in either direction. A property loss is carried forward against later profits of the same property business; so is interest that the profits cap denied relief to. Neither is carried in or out here, and both would reduce a later year’s bill.
- Any structure other than personal ownership. A limited company pays corporation tax, deducts its mortgage interest in full with no restriction, and taxes the money again on the way out. Joint ownership, furnished holiday lettings and rent-a-room relief each have their own rules and none is here.
- The rest of the reader’s tax position. No savings interest or dividends — which slightly overstates the adjusted total income cap above — no property allowance, no capital allowances, no replacement of domestic items relief, no pension contributions, no student loan repayments and no high income child benefit charge. The pension omission matters most: relief at source is one of the few things that genuinely reduces a landlord’s bill, so the tax here is too high for anyone relying on it.
- The tenancy. The rent is what the reader typed rather than what the property will let for, the void allowance is a guess about the future, and maintenance averages out over years rather than arriving evenly. Arrears, a tenant who will not leave, and a major works bill are all real and none of them is a percentage.
Rental yield and landlord tax questions
- How do you calculate rental yield?
Gross yield is the annual rent divided by what the property is worth: £1,250 a month on a £250,000 flat is £15,000.00 a year and a 6.00% gross yield. Net yield uses the same denominator but takes the running costs and the empty weeks off the rent first, which on the same flat gives 4.21%. Keeping the denominator the same for both is deliberate: the whole gap between the two figures is then the cost of owning the property, and nothing else. Neither figure involves a mortgage — a yield measures what the bricks earn, not what your deposit earns.
- What is a good rental yield?
This page will not tell you, and be careful of any page that does. A yield is only comparable against another yield calculated the same way, and almost none of the figures quoted in advertisements or articles are net of anything — so a "6% yield" in one place and a "5% yield" in another may not be measuring the same thing at all. What is worth comparing is your own net figure against what the same money would do somewhere else with no tenant, no void and no repair bill, and against the mortgage rate you are paying, since borrowing at more than the property earns is a loss whatever the headline says.
- What is the difference between gross yield and net yield?
The gross yield uses the rent as advertised. The net yield uses the rent you actually collect — after the weeks between tenancies — less every recurring cost of owning the property: the letting agent's share, the service charge and ground rent if it is leasehold, insurance and maintenance. On the calculator's own figures that is the difference between 6.00% and 4.21% — roughly a third of the yield, all of it invisible in the advertised number. Neither figure includes the mortgage or the tax, because those are facts about you rather than about the property.
- Can I still deduct mortgage interest from my rental income?
No. Since 6 April 2020 finance costs on a residential property let by an individual are not deducted from rental income at all. Instead you get a tax reducer: a fixed amount taken off your income tax bill, worked out at the basic rate on the lowest of your finance costs, your property business profits, and your income above the personal allowance. The practical consequences are that your taxable income is higher than your actual profit by the whole of the interest — which can move you into a higher band or start withdrawing your personal allowance — and that relief comes at the basic rate however much tax you pay. This is often called Section 24, after the section of the Finance Act 2015 that introduced it.
- Does Section 24 affect me?
It depends on what else you earn, not on the property. A landlord whose total income stays inside the basic rate after the mortgage interest is added back gets relief at the basic rate on money that would have been deducted at the basic rate anyway, so the restriction costs them nothing — on the calculator's own property, £0.00 for someone earning £30,000. The same property owned by someone earning £60,000 costs £1,968.75 a year more than it would have done under the old deduction. The awkward cases are in between: adding the interest back is itself what pushes a lot of landlords over the higher-rate threshold, so a landlord who was a basic-rate taxpayer before they bought may not be one afterwards.
- Is rental income taxed at Scottish rates?
Income tax on rental profit is devolved, so a landlord who lives in Scotland pays Scottish rates on it, whatever country the property is in. It is where you live that decides the rates, not where the bricks are. The finance cost reducer is a different matter: it is given at the basic rate as defined for the UK as a whole, and this calculator reads that single figure from the rate table rather than from the Scottish one. The two carry the same rate in every tax year offered here, and the repository has a test that fails if that ever stops being true — because at that point a Scottish landlord would need to be told which rate applies to them.
- Do I pay National Insurance on rental income?
Not on an ordinary property letting. Renting out property is treated as investment income rather than as a trade, so no National Insurance is due on the profit at any level, and none is added anywhere on this page. That is one of the few respects in which rental profit is treated more kindly than self-employed profit, which carries Class 4 and Class 2. Running a property business at a scale that amounts to a trade, or letting furnished holiday accommodation, can change the analysis, and neither is modelled here.
- What is the difference between rental yield and return on investment?
A yield measures the property and a return measures your money. The yield divides the rent by what the property is worth, so it is the same whether you bought it with cash or with a 75% mortgage. The return on investment — cash-on-cash — divides the cash the property actually produces after interest and tax by the cash you actually committed, which is the deposit plus the buying costs. Borrowing raises the second and leaves the first untouched, which is why leverage used to be the whole point of buy-to-let. Since the finance cost restriction it does not reliably do that any more, and the table on this page shows where the turn is for your own figures.
- Does this calculator work out my stamp duty?
Yes, for an ordinary purchase of one residential property, and it works out the Scottish and Welsh equivalents too — Land and Buildings Transaction Tax and Land Transaction Tax. Tell it where the property is and whether you will own more than one afterwards, and the figure goes into the cash you committed, which is where it changes every return on the page. The three jurisdictions charge the surcharge on an additional property by three different mechanisms and the breakdown names the one that applied. What it cannot know is whether a relief applies to you: first-time buyer relief, replacing a main residence, a company or trust purchase, and multiple dwellings relief all change the answer, the full list sits beside the figure, and there is a box to enter your own instead.
- Is the tax on rental income changing?
Yes, from 6 April 2027. Property income stops sharing a rate schedule with employment and pension income and gets its own set of rates, and its position in the order income is taxed in changes with it — property income will sit above other income and below savings interest and dividends. It was announced at Budget 2025 and set out in a technical note linked from the methodology below. No tax year this calculator offers reaches that date, so nothing it shows reflects the change; the latest year here is 2026/27. A property purchase is a long-lived commitment, so it is worth knowing that the tax treatment of its income has a scheduled change ahead of it.
- What does the calculator show on the figures it opens with?
A £250,000 flat let at £1,250 a month, owned by someone earning £50,000, with £187,500 borrowed at 5.25%. The gross yield is 6.00% and the net yield 4.21%. Before tax the flat produces £687.02 of cash a year; the income tax it causes is £2,189.56, which leaves a cash flow after tax of -£1,502.54. The finance cost restriction accounts for £1,968.75 of the tax, and the return on the cash committed is -1.87%.