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See monthly and annual rental cash flow after running costs, mortgage payments and estimated income tax.
This property gives £386.62 a month before tax and £262.51 after estimated tax for 2026/27, averaged across the first mortgage year.
Example: illustrative £40,000 salary, no other income and a 25-year term.
Rates as of
Cash flow measures the money left from letting a property after the costs you enter. A property can have a positive rental yield and still need cash from its owner each month, because of the mortgage payment and the owner's income tax position. This calculator follows one property through its first mortgage year, keeping the same rent, interest rate and running costs throughout.
The loan is the purchase price minus the deposit. The initial 3.75% mortgage rate comes from the Bank of England's policy rate and is only a starting value, not a lender's offer, so enter your actual rate when you have it. For a repayment mortgage, the loan is repaid over the chosen term.
Void weeks reduce annual rent using a 52-week year. Management fees apply to rent collected, while insurance, service charges and maintenance are annual amounts.
For interest-only borrowing, monthly interest equals the outstanding loan multiplied by the annual interest rate and divided by twelve. For a repayment loan, the payment is P × r ÷ (1 − (1 + r) raised to −n), where P is the loan, r is the monthly rate and n is the number of monthly payments. At zero interest, payment is simply P ÷ n. The mortgage balance is followed month by month to separate interest from capital.
Take a £300,000 property, a £75,000 deposit and a 25-year interest-only loan at 3.75%. Rent is £1,500 a month, with two void weeks and a 10% management fee. Annual service charges are £1,200, insurance £300 and maintenance £1,000. The owner has £40,000 salary, no other income and uses 2026/27 tax rules.
The income tax estimate uses England and Northern Ireland rates for an individual resident landlord. There is no Scottish taxpayer input in this tool; use the Section 24 calculator to examine that position. Salary and other income only establish tax bands and are not counted as cash earned by this property. Other income excludes savings and dividends.
Cash-on-cash return uses only the deposit as its denominator because there is no purchase-cost field. It excludes stamp duty, legal fees and initial refurbishment, so it is not a return on every pound invested, and a zero deposit produces no percentage. For a cash purchase, enter a deposit equal to the price.
The model excludes capital growth, sale proceeds, mortgage fees, pension contributions, student loans, National Insurance and carried-forward property losses or finance costs. Maintenance is assumed to be an allowable revenue expense; capital improvements have different tax treatment. Monthly results are annual averages, not a prediction of when rent arrives or tax payments fall due.
HMRC's residential finance cost restriction means mortgage interest is handled as a limited tax credit; repayment of loan capital is not relieved. The tax engine compares total income tax with and without the property, including the personal allowance taper. From 6 April 2027, the enacted England and Northern Ireland property rates are 22%, 42% and 47%, with a 22% finance cost relief rate. Selecting that year explicitly shows the future-law label.
Ask an accountant or tax adviser if the property is held in a company or trust, you live outside the UK, income is jointly owned, you have previous losses, you claim other reliefs, or your expenses include substantial building work. Ask your lender about actual mortgage payments, rate changes and fees.
Start with the rent you expect to collect, deduct operating costs and the full mortgage payment, then subtract the income tax attributable to the letting. Divide the annual result by 12 for an average month. This calculator uses the first mortgage year.
There is no single amount that fits every property. Rent, empty periods, borrowing and repairs can change the result substantially. Enter the costs for your own property and try a less favourable rent or interest rate to see the effect.
This calculator does not offer a way to avoid tax. Rental profit can cross tax bands, and mortgage interest usually gives a restricted tax reduction rather than a full deduction. Ask an accountant or tax adviser about legitimate expenses, your ownership arrangement and your complete circumstances.
Enter management fees, annual insurance, service charges and allowable maintenance, plus realistic void weeks. Mortgage payments are calculated separately. The cash-on-cash figure uses the deposit alone: purchase taxes, legal fees, refurbishment and selling costs are not covered by this tool's inputs.
See gross and net rental yield after running costs, void weeks and stamp duty.
Understand mortgage interest relief and compare two tax years.
Check your qualifying income, entry date and quarterly update deadlines.
Compare calendar and annual/365 rent for part of a period.
