Landlord Tax Calculator UK: Yield, Tax & CGT | Calclens

Calclens Guide

Landlord tax, from purchase to sale

Q: What's a good rental yield for a UK buy-to-let?

As a rough guide, a gross yield of 5 to 6 percent is often considered solid, though it varies hugely by area. Parts of the North can exceed 7 percent, while London yields are frequently below 4 percent. What matters more is the net yield after costs like management, insurance, maintenance and void periods, which can be two or three percentage points lower than gross.

Q: How much is the stamp duty surcharge on a second property?

Buying an additional residential property such as a buy-to-let or second home adds a surcharge on top of the standard stamp duty rates, payable in cash at completion. On a typical buy-to-let this adds thousands to the purchase cost, which is why it should be built into your yield and return calculations from the start.

Q: How much capital gains tax will I pay when I sell a rental?

CGT on residential property is 18 percent for basic-rate taxpayers and 24 percent for higher or additional-rate taxpayers, charged on the gain above the £3,000 annual exempt amount. The gain is the sale price minus purchase price, buying and selling costs, and capital improvements. You must report and pay it within 60 days of completion.

Q: Do I pay tax on rent if the mortgage takes most of it?

Possibly yes. Because mortgage interest is no longer a deductible cost, only a 20 percent credit, your taxable profit can be higher than your actual cash profit. A higher-rate landlord whose rent barely beats the mortgage can still face a tax bill, because tax is calculated before the interest credit is fully applied.

A buy-to-let is taxed at every stage — buying, letting and selling. This guide runs the five calculations that decide whether the numbers stack up, from rental yield to the stamp duty surcharge and capital gains tax.

1Rental yield 2Income tax on rent 3Stamp duty surcharge 4Capital gains tax 5Remortgage

A £250,000 buy-to-let looks simple — until the tax stacks up.

+5%

stamp duty surcharge

24%

CGT on sale

£3,000

CGT allowance

A buy-to-let is taxed three times over — an extra slice of stamp duty going in, Income Tax on the rent each year, and Capital Gains Tax coming out. Miss any of them and a property that looked profitable on paper quietly isn’t. Each calculator below settles one stage — run them in order and you’ll know whether the deal genuinely works, not just whether the rent beats the mortgage.

The landlord path, step by step

Five calculations in the order a buy-to-let actually moves through your hands — assess the return first, then the tax on the way in, during, and on the way out.

Does the deal work?

What’s the rental yield?

Yield is the test every buy-to-let has to pass first. Gross yield is annual rent over purchase price; net yield takes off the running costs that quietly eat returns — management, insurance, maintenance, void periods. A headline 6% gross can fall to 3–4% net once reality lands. Check it before anything else.

Buy-to-Let Yield Calculator →

Tax while you let

How much income tax will you pay on the rent?

Rental profit is taxed at your marginal rate, on top of your other income. The sting for many landlords is that you can’t deduct mortgage interest as a cost any more — instead you get a 20% tax credit, which leaves higher-rate landlords worse off than the old rules. Work out the real after-tax profit.

Rental Income Tax Calculator →

Tax on the way in

What’s the stamp duty surcharge?

Buy an additional property and you pay a surcharge on top of standard stamp duty — a meaningful extra cost due in cash at completion. On a £250,000 buy-to-let the surcharge alone runs to several thousand pounds. Factor it in before you offer, because it changes the true entry price.

Stamp Duty Calculator →

Tax on the way out

What capital gains tax will you owe on sale?

Sell a buy-to-let at a profit and CGT applies at 18% (basic rate) or 24% (higher rate), after a £3,000 annual exempt amount. It must be reported and paid within 60 days of completion. Knowing the bill in advance often shapes when, and whether, to sell.

Capital Gains Tax Calculator →

Keeping it profitable

Should you remortgage the property?

Buy-to-let mortgages are usually interest-only and come up for renewal every few years. When a fixed rate ends, the difference between rolling onto the standard variable rate and remortgaging can decide whether the property still makes money. Check the cost before your deal expires.

Remortgage Calculator →

Why the order matters

Yield comes first because it’s the gatekeeper: if the net return doesn’t work, the tax questions never arise. Plenty of would-be landlords skip it, fall for a property, and only later discover the numbers were never going to add up.

The two tax stages then bracket the investment — the stamp duty surcharge is a cost on the way in, capital gains tax a cost on the way out — and both are easy to underestimate because they’re lump sums, not monthly figures. Income tax on the rent sits in between, year after year. Run them in this order and you see the full lifecycle cost, not just whether this month’s rent covers this month’s mortgage.

Capital gains tax rates on a buy-to-let

When you sell, residential property is taxed at higher CGT rates than most other assets. The rate depends on your total taxable income in the year of sale.

Your tax band	CGT on residential property
First £3,000 of gains (annual exempt amount)	0%
Basic rate taxpayer	18%
Higher / additional rate taxpayer	24%

The gain is the sale price minus what you paid, minus buying and selling costs and any capital improvements — but not repairs or mortgage interest. If a gain pushes you from the basic into the higher band, part is taxed at 18% and part at 24%. Married couples each get their own £3,000 allowance, so jointly owned property can use both. Work your figure through the capital gains tax calculator and remember the 60-day reporting deadline.

Start here

Ready to run your own numbers?

Begin with the rental yield — the test every buy-to-let has to pass — then work down the path one calculator at a time.

Yield Calculator →

A landlord’s path, worked through

One realistic example, run through the whole sequence, to show how the steps connect in practice.

Worked example Mark · higher-rate taxpayer · buying a £180,000 buy-to-let

Yield. At £900/month rent, the gross yield is 6% — but after costs the net yield is closer to 3.5–4%, the figure that actually matters.
Stamp duty surcharge. As an additional property, Mark pays the +5% surcharge on top of standard rates — a large upfront cost many first-time landlords underestimate.
Income tax on rent. As a higher-rate taxpayer, rental profit is taxed at 40%, and mortgage interest only gets a 20% tax credit — not full relief.
Mortgage interest. Because relief is restricted, a heavily mortgaged buy-to-let can leave Mark taxed on profit he doesn’t fully keep — the trap that caught many landlords.
CGT on exit. When he sells, the gain above the £3,000 annual exemption is taxed at 24% (residential, higher rate), reportable within 60 days.

The takeaway: a landlord who looks only at the 6% gross yield and ignores the surcharge, restricted interest relief and exit CGT can badly overestimate returns. Working the numbers in order — net yield, then tax, then exit — shows the real picture before committing.

Five mistakes landlords make

The errors that recur among UK landlords — and the ones that cost the most.

Judging a property on gross yield alone

Gross yield ignores voids, management, maintenance, insurance and tax. The net yield — often 2–3 points lower — is what you actually earn. A 6% gross can be a 3.5% net once reality bites.

Cost: a worse return than expected Fix: always work to net yield

Forgetting the stamp duty surcharge

An additional property carries a +5% SDLT surcharge on the whole price, on top of standard rates. On a £180,000 home that’s £9,000 extra — a cost that can wipe out a year’s profit if unplanned.

Cost: thousands in unplanned SDLT Fix: include the surcharge upfront

Assuming full mortgage interest relief

Since the rules changed, landlords get only a 20% tax credit on mortgage interest, not full deduction. A higher-rate landlord with a big mortgage can be taxed on profit they don’t truly keep. Model tax on the gross rent, not net of interest.

Cost: tax on phantom profit Fix: model the 20% credit correctly

Holding property personally without comparing a company

For some higher-rate landlords, holding through a limited company changes the interest-relief and tax position. It isn’t always better — but not even comparing can leave money on the table. Weigh both before buying.

Cost: a needlessly high tax bill Fix: compare personal vs company

Ignoring CGT until the sale

Capital Gains Tax on a residential sale is 18% or 24% above a £3,000 exemption, reportable within 60 days of completion. Landlords who don’t plan for it face a surprise bill and a tight deadline. Factor exit tax in from the start.

Cost: a 60-day reporting scramble Fix: plan CGT before you buy

Landlord tax questions, answered

What’s a good rental yield for a UK buy-to-let?

As a rough guide, a gross yield of 5–6% is often considered solid, though it varies hugely by area — parts of the North can exceed 7%, while London yields are frequently below 4%. What matters more is the net yield after costs like management, insurance, maintenance and void periods, which can be two or three percentage points lower than gross. The yield calculator shows both.

Can landlords still deduct mortgage interest?

Not as a straight cost. For residential lettings, mortgage interest is no longer deductible from rental income — instead you receive a 20% tax credit on the interest. For basic-rate landlords the effect is broadly neutral, but higher-rate landlords are worse off, because relief is capped at 20% rather than their marginal rate. This is one of the biggest reasons buy-to-let profitability has tightened. The rental income tax calculator reflects it.

How much is the stamp duty surcharge on a second property?

Buying an additional residential property — a buy-to-let or second home — adds a surcharge on top of the standard stamp duty rates, payable in cash at completion. On a typical buy-to-let this adds thousands to the purchase cost, which is why it should be built into your yield and return calculations from the start. Use the stamp duty calculator with the additional-property option to see the full bill.

How much capital gains tax will I pay when I sell a rental?

CGT on residential property is 18% for basic-rate taxpayers and 24% for higher or additional-rate taxpayers, charged on the gain above the £3,000 annual exempt amount. The gain is the sale price minus purchase price, buying and selling costs, and capital improvements. You must report and pay it within 60 days of completion. The CGT calculator estimates the bill.

Should I hold buy-to-let personally or through a limited company?

It depends mostly on your tax band and plans. Higher-rate landlords increasingly use a limited company because the mortgage-interest restriction doesn’t apply — a company deducts interest as a normal cost — and profits are taxed at Corporation Tax rates. But companies bring extra admin, often higher mortgage rates, and tax on extracting profit. There’s no universal answer; model both before deciding, and take advice for a portfolio.

Do I pay tax on rent if the mortgage takes most of it?

Possibly yes — and this surprises many landlords. Because mortgage interest is no longer a deductible cost (only a 20% credit), your taxable profit can be higher than your actual cash profit. A higher-rate landlord whose rent barely beats the mortgage can still face a tax bill, because tax is calculated before the interest credit is fully applied. The rental income tax calculator shows the real position.

When should I remortgage a buy-to-let?

Usually a few months before your current fixed or tracker rate ends, to avoid slipping onto the lender’s standard variable rate, which is typically much higher. Because most buy-to-let mortgages are interest-only, the rate has an outsized effect on profit — a one or two percentage point rise can wipe out a thin margin. The remortgage calculator compares staying put against switching.

Can I avoid CGT by moving into my rental before selling?

Living in a property as your main home can qualify part of the gain for Private Residence Relief, reducing CGT — but only for the period it was genuinely your main residence, and HMRC scrutinises short, convenient moves. It rarely eliminates the bill on a long-held rental and shouldn’t be treated as a simple loophole. Take professional advice before relying on it, and estimate the underlying gain with the CGT calculator first.

How this guide is built

The sequence follows the life of a buy-to-let — assessing the return, then the tax on the way in, during the let, and on the way out — the order a property investor or accountant would naturally work through.

Every calculator linked here is a free Calclens tool with its own methodology and worked examples. CGT rates, the annual exempt amount, the stamp duty surcharge and the mortgage-interest rules follow current HMRC and GOV.UK guidance; the individual calculator pages carry the detailed figures and sources.

Definitions and sources: methodology · sources.

Not tax or financial advice. This guide is for general information and links to calculators that produce estimates. Property tax depends on your circumstances and can change — confirm figures with a qualified accountant or tax adviser before buying, letting or selling.