Mortgage interest relief calculator

Mortgage interest on a home you let isn’t taken off your rent. Instead it cuts your tax by 20% of the lowest of three amounts: your finance costs, your property profit, and your income above the Personal Allowance, not counting savings and dividends. From 2027–28 the rate is 22%.

Checked against HMRC’s guidance and the law by Cristiano Betta of Work Betta Ltd, which makes Tillslip, on 25 October 2026: Tax relief for residential landlords: how it’s worked out, ITTOIA 2005 s274AA, PIM2058: working out the finance cost reduction.

Tax year2025–262026–272027–28

Rent for the year, your share

Other allowable expenses, your share (not the interest)

Mortgage interest and loan fees, your share

Finance costs carried forward from last year (optional)

Your other taxable income after reliefs: pay, pension, self-employed profit (not savings or dividends)

Work it out

How it’s worked out

Take the lowest of: your finance costs for the year, plus any you carried forward; your property profit, which is rent less your other expenses; and your income above the Personal Allowance, not counting savings and dividends. The reduction is 20% of that for 2025–26 and 2026–27, and 22% from 2027–28.

Sources: Tax relief for residential landlords: how it’s worked out · ITTOIA 2005 s274AA · Finance Act 2026 s7

What you carry forward

If your finance costs are more than the lowest amount, the rest carries forward: put it in box 45 of next year’s SA105, for the same lettings. The reduction can’t be more than the tax you’d otherwise pay, and can’t create a refund.

Sources: ITTOIA 2005 s274AA · SA105 and its notes, 2025–26 · ITA 2007 s29 · Tax relief for residential landlords: how it’s worked out

If you own it with someone

Enter your share of the rent, the expenses and the interest: each owner works it out on their own share.

Source: ITTOIA 2005 s274A

What it leaves out

It works for one UK property business, owned by you as a person, not a company. It doesn’t cover property losses from earlier years, total income over £100,000 counting savings and dividends, where the Personal Allowance starts to shrink, the Marriage Allowance or Blind Person’s Allowance, or a let that’s partly commercial. For 2027–28 it uses 22%; Scotland and Wales can set their own property rates from then, so if you pay Scottish or Welsh income tax, check with your accountant.

Sources: PIM2058: working out the finance cost reduction · Income Tax rates and Personal Allowances · Finance Act 2026 Schedule 2

Also: Landlord expenses · Mileage calculator · Mileage rates · SA105 box by box · Keeping receipts · Self-employed expenses · Landlord expenses spreadsheet · Landlord tax changes 2027