How much tax will I pay on my rental income?

Income tax

The rental income after deducting allowable expenses is added to your income for income tax purposes before savings income and dividend income.

If you are married and you jointly own a property then the income is divided equally between you (however you actually share the income) unless you receive it in different shares and you have made an election to HMRC. Please be aware that you cannot do this retrospectively.

The amount of tax you pay will depend on your individual circumstances, the type of income which you receive and any tax reliefs which you claim.

For a taxpayer who is under 65 and has no other income or reliefs, the rates of tax on his/her rental income are as follows:

* The Government has announced in the Budget in November 2025 that for rental profits the rates increase to 22% (basic rate), 42% (Higher Rate) and 47% (Additional Rate). The Welsh rates of Income Tax are set by the Welsh Government but are currently the same as England and Northern Ireland. The Scottish rates of income tax can be found at: https://www.gov.scot/publications/scottish-income-tax-2022-2023/

The personal allowance is withdrawn at the rate £1 for every £2 of income over £100,000 which gives an effective rate of 60% on income between £100,000 and £125,140 for 2025/26.

If you have income from employment, self employment or pensions, this income uses up the personal allowance and the lower rates before the rental income. The rental income may take other income into the higher rate of tax. The higher and additional rates of tax on dividends are different.

National insurance

Normally, you do not pay National Insurance Contributions unless you rent out surplus accommodation in the course of your trade and the rent received is included in your trading profits.

Tax credits

Your net rental income is treated as other income for tax credit purposes. You and your partner’s (if someone is living with you) other income are cumulated and if it is less than £300, the other income is zero or £300 is deducted from the total other income for tax credit purposes.

Child benefit

For individuals with income above £80,000, the amount of the tax charge will equal the amount of the Child benefit payment. For those with income between £60,000 and £80,000, the rate at which HICBC is charged is halved, and will equal one per cent for every £200 of income that exceeds £60,000. The amount of Child Benefit payable will be unaffected by these changes.

UKLandlordTax.co.uk is the trading name of Thandi Nicholls Ltd Accountants Registered Office: Creative Industries Centre, Glaisher Drive, Wolverhampton WV10 9TG.

Registered in England. Company Number 7319439. Director S S Thandi BA