Buy-to-Let Cashflow Calculator

Is buy-to-let still worth it?

The tax treatment of buy-to-let has changed since 2016. Section 24, which stops individual landlords deducting mortgage interest as an expense, and the 5% Stamp Duty surcharge on additional properties both reduce what a landlord keeps, and Section 24 has the most effect at the higher and additional rates.

At the same rent and mortgage rate, a higher-rate taxpayer keeps less after tax than a basic-rate taxpayer. A limited company deducts interest as a business cost but pays Corporation Tax, and the owner pays dividend tax when profit is taken out, so the two routes are taxed in different ways. This calculator shows both for the figures you enter.

Section 24 explained

The rule (fully in force since April 2020): For individual landlords of residential property, mortgage interest and other finance costs are no longer deducted from rental income. Instead, Income Tax is reduced by 20% of the finance costs (strictly, 20% of the lowest of the finance costs, the property profits and the income above the Personal Allowance). The difference from a full deduction is largest for higher- and additional-rate taxpayers.

Example: A landlord pays £4,000 of mortgage interest. If all their income stays within the basic-rate band, a £4,000 deduction would have saved £800 (20%), and the 20% tax reduction is also £800, so the result is the same. For a higher-rate taxpayer the deduction would have saved £1,600 against an £800 reduction, so £800 more tax; at the additional rate (45%) the difference is £1,000.

The key difference: Limited Companies can deduct interest as a normal expense. So a company with the same £4,000 interest saves corporation tax (25% or 19%) on that amount. The owner then pays dividend tax on profits extracted (10.75%–39.35%). Which route leaves more depends on the profit, the owner’s tax rate and how much profit is taken out.

Personal vs Limited Company (SPV)

Personal landlord: Rental profit is added to your other income for Income Tax. Interest is not deductible but gives a 20% tax reduction, which matches a deduction at the basic rate and gives less relief at the higher rates. You pay CGT (18% basic, 24% higher) on any gain when you sell, with a £3,000 annual exempt amount. You also pay the 5% SDLT surcharge on purchase.

Limited Company: The company deducts interest as a normal expense. Taxable profit faces corporation tax (25% standard; 19% if profit under £50k; marginal relief £50k–£250k). When you extract profit as a dividend, you pay dividend tax (10.75% basic, 35.75% higher, 39.35% additional) — but you get a £500 allowance. On sale, the company pays corporation tax on the gain (not CGT). Structurally more complex and costly to set up and run.

Where the comparison tips: company ownership tends to compare better where the owner pays tax at the higher or additional rate and the interest is large relative to the profit, because the company deducts the interest in full. With modest interest and basic-rate tax, Section 24 costs little and the personal route avoids the running costs of a company. The comparison panel below the results shows both for your figures.

Detailed breakdown

Hidden costs not in this calculator

Empty periods and arrears: The calculator assumes rent is received for all twelve months, so months with no rent, arrears and the cost of possession proceedings belong in the running costs figure. In England, since 1 May 2026 there is no section 21: possession needs a section 8 ground, rent rises are limited to one section 13 notice a year, and you cannot take more than a month's rent up front — the cashflow implications are summarised in what the Renters' Rights Act 2025 means for the money.

Major repairs: Boiler replacement, roof repairs and structural work are irregular costs. The running costs figure is where a yearly reserve for them can be included.

EPC upgrades: Privately rented homes in England and Wales must already have an EPC rating of at least E, unless a valid exemption is registered. In January 2026 the government confirmed a higher standard, equivalent to EPC C, that all tenancies must meet by 1 October 2030, with landlords required to spend up to £10,000 per property on improvements; its impact assessment estimates an average spend of £5,400.

Remortgage costs: Arrangement, valuation and legal fees recur each time the mortgage is refixed. They are not in the calculation unless you add a yearly amount to the running costs.

Borrowing costs: The calculator uses the first year’s interest on the full loan at the rate you enter. Buy-to-let mortgage rates are set by each lender and can differ from residential rates, so the rate on the actual offer is the one to use.

Capital Gains Tax on sale

When you sell, CGT is charged on the gain: the sale price minus the purchase price and allowable costs such as buying and selling costs and improvements. Personal landlords pay 18% (within the basic-rate band) or 24% (above it), after the £3,000 annual exempt amount. Companies pay Corporation Tax on the gain (25% or 19%).

This calculator does not include the tax on a future sale; the CGT property calculator linked above works it out.

The 60-day CGT reporting rule

When you sell a UK residential property, any Capital Gains Tax due must be reported and paid within 60 days of completion, through a Capital Gains Tax on UK property account. HMRC can charge penalties and interest if the deadline is missed.

This is not tax advice

Buy-to-let tax treatment is complex and depends on your circumstances (capital gains, number of properties, company structure, furnished holiday lettings, mortgage revaluations). This calculator shows the mechanics of Section 24, SDLT, and basic tax treatment but omits many details. A qualified tax adviser or accountant can look at the full position before a purchase or a change of ownership structure. The rules also change year to year — especially on SDLT, mortgage interest relief, and corporation tax rates.