Buy To Let Mortgage Tax Relief Calculator
England/ Wales
Scotland

Notes

  1. This is only a guide and the above calculation does not cover all possible scenarios.
  2. This does not consider any other income such as bonuses, dividends however some of this you could include in the annual employment/ trade income section.
  3. This does not consider any losses from previous years being carried forward.
  4. This considers that rental income and outgoings such as mortgage interest are the same over subsequent tax years.

Calculation

  1. Deductible Mortgage Interest d: This is reduced by 25% each tax year of the Mortgage Interest (c), that is 25%, 50% , 75% and then 100%
  2. Taxable Rental Income e = a - b - d
  3. Tax on Rental Income f: This considers your annual employment/ trade income + taxable rental income, and then calculated based on the income tax bands as stated below.
  4. Mortgage Interest Relief g = (c - d) x (20/100). This is the credit based on basic income tax band at 20%
  5. Tax Due on Rental Income h = f - g
  6. Net Profit After Tax i = a - b - c - h

Bands for 2017-2018 year are as follows. This was when this started to be phased in, therefore by using the same rates for all years gives you a good comparison how this will affect your profits as it is being phased in.

Band Taxable Income England/ Wales Taxable Income Scotland Tax Rate
Personal Allowance Up to £11,500 Up to £11,500 0%
Basic rate £11,501 to £45,000 £11,501 to £43,000 20%
Higher rate £45,001 to £150,000 £43,001 to £150,000 40%
Additional rate over £150,000 over £150,000 45%

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