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Landlord tax calculator

What a rental costs in tax personally, and what it would cost in a company

Since Section 24 finished phasing in, mortgage interest is not a deductible expense on a personally held rental. It is added back to profit and relieved by a flat twenty per cent credit, which is why a higher rate landlord can pay tax on money the lender has already taken. A company still deducts it in full. This runs both, including the cost of getting the money back out of the company, which is the half that usually gets left out.

For: A landlord holding, or deciding how to hold, a rental

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The property or portfolio
The figures below are per property, and are multiplied by this. Useful for seeing where a portfolio tips from one answer to the other.
£
£
Agent fees, repairs, insurance, certificates, ground rent and service charge. Repairs are deductible; improvements are not, and they go against the capital gain instead when you sell.
£
Interest only, not capital. This is the line Section 24 targets: personally, it is added back to profit and relieved at a flat 20% instead of being deducted.
£
Salary, pension, self-employment. Your marginal rate on the next pound is 40%, which is what decides how hard Section 24 hits.
If it were held in a company
Would you take the money out?
Corporation tax first, then dividend tax on what comes out. This is the honest comparison against holding personally, where the money is already yours.
£
Accounts, confirmation statement, corporation tax return and the accountant who does them. £800 to £2,000 a year for a simple property company, and it is a real cost that a personal holding does not have.
If it were held jointly£1,060 saved
Split with a spouse or civil partner?
In a single name, so all the profit stacks on one person's income.
A company keeps more£405£4,300 of actual cash profit. Held personally you keep £1,320 after £2,980 of tax; in a company you keep £1,725 after £1,175, including the dividend tax on getting it out. Section 24 alone costs you £1,260 a year against the old rules. Compounded across a portfolio and a holding period that is a large number, and it is only half the decision.
£4,300Cash profit
£2,980Tax, personally
£1,175Tax, in a company
69% vs 27%Effective rate
£1,260Cost of Section 24
You keep, personally31%Tax, personally69%
Held personally
Rent£14,400
Less running costs−£3,800
Taxable property profit£10,600
Note what is not deducted: the £6,300 of mortgage interest. Since Section 24 finished phasing in, it is added back and relieved by a credit instead.
Tax on that profit£4,240
At your marginal rate of 40%, on top of £52,000 of other income.
Less the 20% finance cost credit−£1,260
Twenty per cent of the lowest of the finance cost, the property profit, and your income above the personal allowance. That restriction is what most calculators get wrong, and it usually understates the bill.
Tax, personally£2,980
Cash you actually made£4,300
Rent less costs less the interest the lender took.
You keep£1,320
An effective tax rate of 69.3% on the cash you actually made.
What Section 24 costs
Tax under the old rules£1,720
If mortgage interest were still deductible from profit in the ordinary way, as it is for every other business.
Section 24 costs you£1,260
Every year, on this property. Interest is 44% of your rent, and the more geared the property the harder this bites.
Held in a company
Rent less costs less interest£4,300
A company deducts mortgage interest in full, like any other business expense. This is the entire case for incorporating.
Less the cost of running the company−£1,400
Corporation tax£551
On £2,900 of profit. Nineteen per cent to £50,000, 25% above £250,000, and an effective 26.5% in the marginal band between.
Dividend tax on taking it out£624
On £2,349 after corporation tax, on top of your other income. The £500 dividend allowance is what is left of a £5,000 one. This is the half of the comparison that usually gets left out.
Tax, in a company£1,175
You keep£1,725
An effective rate of 27.3%.
The comparison
Personally£1,320
In a company£1,725
Difference£405
A year, in the company's favour. Against that sit the costs of getting there, which are the part nobody puts in a calculator: moving an existing property into a company is a disposal at market value, so stamp duty at additional property rates is payable on the whole value and capital gains tax may be too.
Holding it jointly with a spouse would save£1,060
Two personal allowances and two sets of bands. Far cheaper to arrange than incorporating, and it does not trigger a disposal. Jointly held property is taxed 50:50 by default; a Form 17 election with a declaration of trust is needed for any other split.
Where these figures come from

Section 24. For 2026/27 the basic rate tax reducer is 20% of the lowest of the finance costs, the property business profit, and adjusted total income above the personal allowance. The personal allowance is £12,570 and the higher rate threshold £50,270, both frozen.

Corporation tax. 19% on profits to £50,000 and 25% above £250,000, with marginal relief between giving an effective 26.5% in that band. Companies are outside Section 24 and deduct finance costs in full.

Dividends. £500 allowance, then 8.75%, 33.75% and 39.35% by band.

Furnished holiday lettings. The regime ended on 1 April 2025 for corporation tax and 6 April 2025 for income tax and capital gains tax, so short lets now face the same Section 24 restriction as any other rental.

A comparison of the running position only. It does not price the cost of getting from one to the other, and that cost is usually decisive: moving an existing property into a company is a disposal at market value, so stamp duty is payable at additional property rates on the whole value and capital gains tax may be payable on the way out. Incorporation relief and partnership incorporation can mitigate that in some cases and are heavily fact-dependent. A company also faces higher mortgage rates, a shorter lender list, annual filing obligations and, on a large portfolio, the annual tax on enveloped dwellings on any property over £500,000 used personally. Directors' loans, salary rather than dividends, and pension contributions all change the extraction arithmetic. An estimate, not tax advice, and precisely the calculation to take to an accountant.

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