Mortgage Tax Return Calculator UK 2025/26

Reviewed by Mustafa Bilgic
UK Calculator Editor · Updated May 2026

How mortgage interest is treated on a UK tax return in 2025/26

Since April 2020, individual landlords cannot deduct mortgage interest from rental income to calculate taxable profit. Instead, HMRC applies a flat 20% tax reducer (Section 24 of the Finance (No. 2) Act 2015) against your final tax bill.

On the SA105 supplementary pages of your Self Assessment return, mortgage interest goes in Box 44 ("Residential property finance costs") — not in the allowable expenses section. The figure entered there is multiplied by 20% and subtracted from the income tax that the rental profit would otherwise generate.

The credit is restricted to the lowest of: (a) 20% of the mortgage interest paid; (b) 20% of the rental profit before the deduction; and (c) 20% of the taxpayer's adjusted total income above the personal allowance. Any unused interest carries forward indefinitely against future rental profits.

The change does not affect properties held inside a UK limited company, where mortgage interest remains a fully deductible business expense before corporation tax.

Which boxes does mortgage interest go in on the SA105?

On the 2025/26 SA105, the relevant entries for a typical residential let are:

• Box 20 — Total rents and other income from property (gross rent received).
• Box 24 — Allowable property expenses (repairs, agent fees, council tax during voids, insurance).
• Box 26 — Other allowable property expenses.
• Box 44 — Residential property finance costs (mortgage interest paid in the tax year). HMRC applies the 20% credit automatically.
• Box 45 — Unused residential finance costs brought forward from earlier years.

If you complete the return online at gov.uk, the system asks the questions in plain English and routes the figures to the correct box. The output of this calculator gives you the exact numbers to type in.

Example 1: Basic-rate landlord, modest mortgage

Sarah lets out a former main residence in Leeds. In 2025/26 she received £14,400 rent. Her allowable expenses were £2,800 (letting agent, gas safety, repairs). Mortgage interest paid was £4,200. Her PAYE day-job pays £32,000 gross.

1. Net rental profit (S24 method): £14,400 − £2,800 = £11,600
2. Total income: £32,000 + £11,600 = £43,600
3. Tax on rental profit at 20% basic rate (still within £50,270): £11,600 × 20% = £2,320
4. S24 credit: 20% of £4,200 = £840
5. Net tax due on the rent: £2,320 − £840 = £1,480

Sarah enters £14,400 in Box 20, £2,800 in Box 24 and £4,200 in Box 44.

Example 2: Higher-rate landlord, the squeeze bites

James earns £62,000 from his employer. He owns a two-bed flat in Manchester let for £18,000 a year. Allowable expenses are £3,200 and mortgage interest is £8,400.

1. Net rental profit (S24): £18,000 − £3,200 = £14,800
2. Total income: £62,000 + £14,800 = £76,800 (firmly in the 40% band)
3. Tax on rental profit at 40%: £14,800 × 40% = £5,920
4. S24 credit: 20% of £8,400 = £1,680
5. Net tax on the rent: £5,920 − £1,680 = £4,240

Pre-2020, James would have deducted the £8,400 interest first, paying tax on £6,400 profit at 40% = £2,560. The 2025/26 method costs him an extra £1,680 — exactly the difference between the 40% deduction he lost and the 20% credit he gained.

Example 3: Loss year carrying interest forward

Priya's leasehold flat in Bristol was empty for 4 months in 2025/26 after a tenant left. Rent received was £6,500. Expenses (service charge, ground rent, repairs) were £4,800. Mortgage interest was £6,000.

1. Net rental profit: £6,500 − £4,800 = £1,700
2. S24 credit cap: 20% of £1,700 = £340 (because 20% of profit is lower than 20% of interest)
3. Tax on £1,700 at her higher-rate band: £680
4. Net tax: £680 − £340 = £340
5. Unused interest carried forward: £6,000 − £1,700 = £4,300

Priya enters £4,300 in Box 45 of the next year's SA105 to reduce her future bill.

Common mistakes to avoid

• Putting mortgage interest in Box 24 with other expenses — this overstates your loss and HMRC will adjust the figure.
• Claiming the credit before income tax — it is a tax reducer applied after the income tax calculation, not before.
• Forgetting that the credit is restricted by adjusted income; if PA tapering pushes adjusted income down, the cap is lower.
• Including capital repayments in the interest figure — only the interest element of each monthly mortgage payment qualifies.
• Missing the carry-forward in Box 45 the following year, losing tax relief permanently.
• Treating a remortgage on the property as new borrowing — additional borrowing above the original purchase price is not relievable.

When to use this calculator

Use this calculator before you file your Self Assessment return — typically between 6 April and 31 January. It is also useful at year-end if you are deciding whether to remortgage, switch to interest-only, or transfer the property into a limited company structure to escape Section 24.

How this differs in Scotland, Wales and Northern Ireland

These rules apply to UK-resident individual landlords whose properties sit in the UK. Welsh and Scottish landlords use the same SA105 form because mortgage interest treatment is reserved to Westminster, but the income tax bands above the personal allowance differ in Scotland (19% starter, 20% basic, 21% intermediate, 42% higher, 45% advanced, 48% top). Scottish landlords still receive only a 20% basic-rate credit, which makes the squeeze worse for higher-rate Scottish taxpayers.

When this calculator is and isn't the right tool

The Mortgage Tax Return Calculator UK 2025/26 above is built for the most common UK 2025/26 scenarios in this tax area. It will be the right tool when your situation maps cleanly onto the inputs — single property or simple aggregation, standard HMRC rates and bands, and individual taxpayer (rather than complex trust or partnership structures). It is informational and does not replace tailored advice from a chartered tax adviser, especially for transactions above £500,000, cross-border situations, or where reliefs interact with each other. For year-end filings, always reconcile with HMRC's own free calculators on gov.uk before pressing submit on Self Assessment.

Closely related calculators

• Rental Income Tax Calculator 2025/26 — useful when you need a different angle on the same UK property tax topic, especially if your situation involves multiple types of property income or disposal.
• Section 24 Mortgage Interest Relief Calculator — useful when you need a different angle on the same UK property tax topic, especially if your situation involves multiple types of property income or disposal.
• UK Landlord Tax Calculator 2025/26 — useful when you need a different angle on the same UK property tax topic, especially if your situation involves multiple types of property income or disposal.
• £1,000 Property Allowance Calculator — useful when you need a different angle on the same UK property tax topic, especially if your situation involves multiple types of property income or disposal.
• Self Assessment Tax Calculator — useful when you need a different angle on the same UK property tax topic, especially if your situation involves multiple types of property income or disposal.

Glossary of UK property tax terms

Section 24

The 2017 rule replacing full mortgage interest deduction with a 20% tax credit for individual residential landlords.

SA105

The Self Assessment supplementary form for UK property income.

Box 44

The SA105 box for residential property finance costs (mortgage interest).

Property allowance

£1,000 tax-free band for individual property income, claimable instead of expenses.

Rent-a-Room scheme

Separate £7,500 allowance for letting a furnished room in your main home.

Tax planning checklist

1. Confirm the figures input above match your actual position — purchase contract, mortgage offer or completion statement.
2. Cross-check the year (2025/26) — figures change every April. The tax year 2026/27 starts 6 April 2026.
3. Use HMRC's official calculator at gov.uk for the final filing figure; this calculator is informational.
4. Keep records for at least 6 years — HMRC's normal enquiry window. 21 years for fraud investigations.
5. Discuss any unusual transaction (joint purchase, gift, divorce settlement, trust) with a qualified tax adviser.
6. Submit your return online via Government Gateway — paper deadlines are earlier and penalties harsher.