Buy-to-let yield & landlord tax calculator

Because your taxable property profit is calculated before deducting mortgage interest, while your real cash profit is after it. The gap between the two is exactly your mortgage interest — and that gap only gets a flat 20% tax credit against your bill, not a full deduction, regardless of your actual tax rate.

Gross yield is annual rent divided by property value — a quick, rough comparison figure. Net yield subtracts your ordinary running costs (letting agent fees, insurance, repairs) first, giving a more realistic return — but neither figure accounts for mortgage interest or tax, which depend on how the property is financed and your personal tax position, not the property itself.

The credit is capped at 20% of the smallest of three figures: the interest you actually paid, your property's taxable profit, or your income above the personal allowance. If your mortgage is highly leveraged relative to your rental profit, or your income is low, the cap — not the interest paid — decides your credit.

No — it only affects individual landlords who own property personally. A limited company still deducts mortgage interest as a normal business expense before Corporation Tax, which is exactly why many landlords with larger portfolios have incorporated since this rule came in — see the personal-vs-company comparison above.

Often better on the ongoing income tax if you're a higher-rate taxpayer with a large mortgage — but it's rarely the full picture. If you extract the profit as dividends straight away, you're paying two layers of tax (Corporation Tax, then dividend tax) instead of one, which can close much of the gap or even reverse it for a basic-rate landlord. The company route tends to win most clearly when profit is left inside the company to reinvest rather than taken out, and for landlords planning to buy further properties (where the interest deduction keeps compounding). It's a much bigger decision than the ongoing tax alone — moving an existing property into a company usually triggers Stamp Duty and potentially Capital Gains Tax as if you'd sold it, on top of extra accountancy costs and mortgage products built specifically for limited companies (often at a slightly higher rate). Always run the numbers with an accountant before incorporating.

It's based on where you live (your main residence), not where the property is. If you live in Scotland, select Scotland — it applies Scotland's own Income Tax bands to your combined income.

Set mortgage interest to £0 — Section 24 doesn't affect you at all, since there's no finance cost to restrict. Your taxable profit and cash profit will be the same figure.

No — treat it as a planning estimate. It doesn't model furnished holiday lettings (which have different rules), the Rent-a-Room scheme, wear-and-tear/replacement-of-domestic-items relief, mortgage arrangement fees, or void periods with no rent coming in. Always confirm final figures with an accountant or HMRC before filing.