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UK Tax Calculation Formula:
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This calculator combines rental income with salary to estimate UK tax liability. It accounts for standard allowances and deductible expenses to provide a more accurate tax calculation for landlords who also receive employment income.
The calculator uses the formula:
Where:
Explanation: The calculator combines all income sources, subtracts applicable allowances and expenses, then applies the tax rate to the remaining taxable amount.
Details: Accurate tax calculation helps landlords budget for tax payments, avoid underpayment penalties, and maximize legitimate tax relief through allowances and expenses.
Tips: Enter all amounts in GBP. Include all rental income and employment salary. Deduct allowable expenses like mortgage interest (limited), repairs, and agent fees. The £1,000 property allowance is pre-filled but can be adjusted.
Q1: What's the £1,000 property allowance?
A: This is a tax-free allowance for property income. You can claim the lower of £1,000 or your actual rental income instead of deducting expenses.
Q2: Can I claim mortgage payments as expenses?
A: Only the interest portion of mortgage payments is deductible, and it's restricted to basic rate tax relief.
Q3: What tax rate should I use?
A: Use your marginal tax rate (20% basic, 40% higher, or 45% additional rate). The calculator doesn't account for tax bands.
Q4: Are there other allowances I can claim?
A: You may qualify for personal allowance (£12,570 in 2023/24) which should be considered in your overall tax calculation.
Q5: When is rental income tax due?
A: Through Self Assessment by 31 January following the tax year. Payments on account may be required.