Rental Yield & Buy-to-Let Profit Calculator

Work out the gross and net rental yield on a buy-to-let — and your estimated after-tax profit, including the Section 24 mortgage-interest tax credit for your income tax band.

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Income tax band — England, Wales & NI

Scottish taxpayers pay different income tax rates on rental profit, so this estimate may not apply.

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Gross yield 5.8%. Net yield 4.8%. Profit after tax £2,340 a year.

£1,200 a month is a 5.8% gross yield, 4.8% net of running costs. After £6,000 mortgage interest your cash profit is £5,900 a year. As a higher (40%) landlord, estimated income tax of £3,560 leaves £2,340 a year — about £195 a month.

Cash profit (pre-tax)£5,900/yr
Estimated income tax£3,560/yr
Profit after tax£2,340/yr

From rent to profit after tax

Annual rent£14,400
Less running costs− £2,500
Less mortgage interest− £6,000
Cash profit before tax£5,900
Taxable rental profit £11,900
Tax before credit (Higher)£4,760
Estimated Section 24 tax credit − £1,200
Estimated income tax£3,560
Profit after tax£2,340
Per month · 3.1% on cash£195
The Section 24 effectYour mortgage interest reduces your cash profit, but for individual landlords it no longer reduces taxable rental profit. Instead you get a 20% basic-rate tax credit — so higher- and additional-rate landlords pay more tax than the cash profit alone suggests. The restriction doesn't apply in the same way to companies, but company ownership brings its own Corporation Tax, financing, admin and profit-extraction considerations — so it isn't automatically cheaper.

Frequently asked questions

What is a good rental yield in the UK?

It depends on the area and your strategy, but a gross yield of around 5%–8% is often seen as solid for a UK buy-to-let. Higher yields (cheaper areas, the North) usually come with lower capital growth; lower yields (the South East) often come with stronger price growth. Always look at the net yield after costs.

What is the difference between gross and net rental yield?

Gross yield is the annual rent as a percentage of the property price, ignoring costs — handy for quickly comparing properties. Net operating yield deducts running costs such as management, insurance, maintenance and expected voids, but excludes mortgage interest and tax. Financing is shown separately in the cash-profit and after-tax figures, because the mortgage depends on each buyer rather than the property itself.

How do you calculate rental yield?

Gross yield = (monthly rent × 12) ÷ property price × 100. For example, £1,200 a month on a £250,000 property is £14,400 ÷ £250,000 = 5.76%. Net yield does the same with the annual profit after costs instead of the full rent.

What is cash-on-cash return?

Cash-on-cash return (ROI) is the annual profit divided by the actual cash you invested — your deposit plus buying costs. On a mortgaged purchase you put in less cash, so even with interest as a cost the percentage return on your money can be higher than the net yield.

Do you pay tax on rental income?

Yes. Rental profit is subject to Income Tax. Since the Section 24 changes, individual landlords can no longer deduct mortgage interest as a cost — instead you get a 20% tax credit on it — which can push higher-rate landlords into a bigger bill. This calculator shows a simplified estimate of both your cash profit before tax and your profit after Income Tax, including an estimated Section 24 finance-cost tax credit. Speak to an accountant for your exact position.

New to landlord tax? Read how buy-to-let tax works. Selling the property later? Estimate the bill with the buy-to-let CGT calculator.

Related calculators & guides

Sources & guidance

Last reviewed June 2026 against official rates · How we calculate →

An illustration based on the figures you enter. The tax estimate applies the Section 24 credit to your chosen band but doesn't model your full income, the personal allowance, other reliefs, or holding property through a company. Capital growth and Capital Gains Tax on sale aren't included. For your own position, speak to an accountant. This is not financial advice.