Buy-to-Let Profit Calculator
Annual pre-tax and post-tax profit on a mortgaged buy-to-let.
Annual rent
£13,200
Mortgage interest
£7,800
Profit before tax
£2,200
Estimated tax
£440
Profit after tax
£1,760
Monthly profit after tax
£147
What this calculator tells you
Since the Section 24 rules were fully phased in, individual landlords can no longer deduct mortgage interest from rental income. Instead, tax is charged on rent less running costs, and a basic-rate credit worth 20% of the interest is applied afterwards. For higher-rate taxpayers this materially changes what a mortgaged property actually earns.
How it works
- 1Annual rent minus allowable running costs gives taxable rental profit.
- 2Tax is charged on that figure at your marginal rate.
- 3A tax reducer worth 20% of your mortgage interest is then subtracted from the bill.
- 4Real profit is rent, minus costs, minus the full interest, minus the tax due.
Worked example
A higher-rate landlord with a £150,000 mortgage
- Rent £13,200, costs £3,200, interest £7,800.
- Profit before tax: £2,200.
- Taxable profit: £13,200 − £3,200 = £10,000. Tax at 40% = £4,000.
- Less the 20% interest credit (£1,560) = £2,440 tax due.
- Profit after tax: £2,200 − £2,440 = −£240.
The property is profitable before tax and loss-making after it — the classic Section 24 trap, and the reason many higher-rate landlords review their structure.
Frequently asked questions
Does Section 24 apply to limited companies?
No. Companies deduct mortgage interest as a normal business expense and pay corporation tax on the profit. That is why incorporation is common for heavily mortgaged portfolios — though transferring existing property into a company can trigger stamp duty and capital gains tax.
Which costs are allowable against rental income?
Letting and management fees, landlord insurance, repairs and maintenance (not improvements), safety certificates, licensing fees, accountancy, ground rent and service charge, and travel to the property. Capital improvements are not allowable but may reduce a future capital gains bill.
Related content
These calculators give general estimates for UK private landlords and letting agents, not legal, tax or financial advice. Figures depend on your circumstances and on the rules in your part of the UK — check the detail or take advice before acting.