1. What is UK Rental Income Tax?

The UK rental income tax is calculated on your profit from renting out property after deducting allowable expenses and the £1,000 property allowance. It's part of your self-assessment tax return.

2. How Does the Calculator Work?

The calculator uses the UK government's rental income tax formula:

Where:

• \( Rental\ Income \) — Total rent received (GBP)
• \( £1,000 \) — Property allowance (can choose between this or deducting actual expenses)
• \( Expenses \) — Allowable expenses if claiming instead of property allowance (GBP)
• \( Tax\ Rate \) — Your applicable income tax rate (%)

Explanation: The calculation first deducts either £1,000 property allowance or your actual expenses, then applies your tax rate to the remaining amount.

3. Importance of Rental Tax Calculation

Details: Accurate rental income tax calculation ensures compliance with HMRC requirements and helps landlords budget for their tax liabilities.

4. Using the Calculator

Tips: Enter your total rental income in GBP, deductible expenses (or leave as 0 to use £1,000 allowance), and your applicable tax rate (basic rate is 20%).

5. Frequently Asked Questions (FAQ)

Q1: What's the £1,000 property allowance?
A: It's a tax-free allowance for property income. You can deduct either this or your actual allowable expenses - whichever gives better tax relief.

Q2: What expenses are deductible?
A: Allowable expenses include letting agent fees, maintenance/repairs, insurance, ground rent, and mortgage interest (with restrictions).

Q3: What tax rates apply to rental income?
A: It's added to your other income and taxed at 20% (basic rate), 40% (higher rate), or 45% (additional rate).

Q4: When is rental income tax due?
A: Through self-assessment, with payments due by 31 January following the tax year (and 31 July for payments on account).

Q5: Is mortgage interest still deductible?
A: Since 2020, mortgage interest relief is given as a 20% tax credit rather than a full deduction.