RLA Tax Calculator For Landlords

In the summer 2015 Budget, the Chancellor announced that finance costs including Mortgage Interest Relief for residential landlords would be restricted to the basic rate of income tax (20%). Read more...

Finance costs include mortgage interest, interest on loans to buy furnishings and fees incurred when taking out or repaying mortgages or loans. No relief is available for capital repayments of a mortgage or loan.

Landlords will no longer be able to deduct all of their finance costs from their property income to arrive at their property profits. They will instead receive a basic rate reduction from their income tax liability for their finance costs.

Under the current rules the full amount of finance costs paid by Landlords are allowed as deduction against rental income.

The new rules will be introduced gradually over a three year period starting from 6 April 2017, and relief will be available as follows:

  • In 2017/18, the deduction from property income will be restricted to 75% of the finance costs incurred, with the remaining 25% being available as a basic rate reduction.
  • In 2018/19, 50% of the finance costs will be given as deduction and the remaining 50% will be given as a basic rate reduction.
  • In 2019/20, 25% of the finance costs will be given as deduction and the remaining 75% will be given as a basic rate reduction.

The Summer 2015 Budget mortgage interest announcement will affect many landlords.

This calculator will help you to work out if you will be paying extra tax and how much more you could be paying in 2020 when the new rules are fully phased in.

Input your salary from employment other than your rental income as per your 2014 P60
This is how much PAYE should have been deducted based on the salary you entered, on the assumption that there are no adjustments to your PAYE coding notice. As with all calculations on this page, this is based on 2014/15 thresholds, to give a like-for-like comparison.
Assumes no PAYE coding notice adjustment, no benefits, no employment non-reimbursed expenses and similar
This is the income from rent (before deductions) in the 2014/15 tax year
This does NOT include any cost associated with your mortgage or any other interest paid on loans on your property.
This includes repairs, maintenance, agency fees etc in the 2014 tax year
This includes Mortgage Interest you paid, plus any other cost in obtaining your mortgage and other finance / loans
in renovating your property in the 2014/15 tax year
Please don't include any payments on account here

The changes will have placed you into a higher tax bracket.

TOTAL TAX OWED (not including payments on account) This is what you would have had to pay,
had the rules being phased in by 2020, applied now. This provides a like-for-like comparison.
If negative figure, or zero, then you are not in a negative position

Disclaimer and calculator assumptions

This calculator is best suited to a landlord who receives rental income and has no other taxable income other than PAYE employment or pension income.

Please note, this is a limited basic calculator, and is intended as an approximate guide. Every taxpayers' circumstances are different, and consequently, this may not be a true reflection of your actual tax position. There are a wide range of factors which may affect the result, for instance, if you have other taxable income, if you receive taxable benefits, if you contribute to an AVC pension, make gift aid donations or are in receipt of capital gains. This is just naming a few, and if you are in any doubt whatsoever, it is highly recommended to seek professional assistance from specialists property tax advisors such as RITA4Rent. We accept no responsibility or liability to any party who seeks to rely on the results of this calculator. For ease of comparison, we have selected the 2014/15 tax thresholds and rates, so as to give a more direct comparison. Please note that the thresholds regularly change, and it is recommended to review the Budget, so as to ascertain the tax threshold changes between now, and when the phase in is complete in 2020.

Please note that any contract for the supply of goods/services will be made between you and the provider of the goods/services; not with the Residential Landlords Association Limited or any of its associated companies. The RLA has no liability in relation to any contract entered into by you as the RLA only acts as an introducer.

Landlord & Investment Show
Martin Co
Envirovent
Landlord Broadband

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