Buy-to-Let ROI Calculator
Full UK BTL analysis: yields, cash flow, Section 24 / Ltd Co tax treatment, 5-year total return
Annual Income & Costs Breakdown
Total Cash Invested
5-Year Total Return
Understanding Buy-to-Let ROI for 2026/27
Buy-to-let investing in the UK got materially harder after Section 24 (the "tenant tax") was phased in between 2017 and 2020. Under Section 24, private landlords can no longer deduct mortgage interest from rental income before calculating tax — instead they receive a basic-rate tax credit (20%) against the interest. For higher and additional-rate taxpayers, this can turn previously profitable BTL investments into loss-makers, especially on heavily geared portfolios.
The Limited Company structure sidesteps Section 24 entirely because companies still deduct interest as a business expense. However, companies pay Corporation Tax (currently 25% on profits above £50k, 19% on profits below) and extracting profits as dividends triggers another tax layer. There’s also the Stamp Duty additional property surcharge, tighter lending (limited BTL mortgages are more expensive), and higher accountancy costs. For many portfolios the breakeven between personal and company ownership sits around 3-5 properties or somewhere between basic-rate and higher-rate taxpayer status.
The buy-to-let ROI calculator above models both personal (Section 24) and Limited Company scenarios side-by-side, showing gross yield, net yield, cash flow, and return on equity. It handles the full 2026/27 tax environment: Section 24 credit, Corporation Tax, dividend tax, the 5% Stamp Duty surcharge, and the correct income stacking for CGT when you eventually sell.
Key Figures for the 2026/27 Tax Year
- Section 24 mortgage interest relief: 20% basic rate tax credit (not deduction)
- Stamp Duty additional property surcharge: 5% (from October 2024)
- Corporation Tax (limited company BTL): 19% below £50k profit / 25% above £250k
- Dividend Allowance: £500 (2026/27)
- Dividend tax rates: 8.75% / 33.75% / 39.35%
- Typical BTL gross yield target: 5-8% depending on region
- CGT on BTL sale: 18% / 24% — same as other assets in 2026/27
- BTL mortgage typical LTV ceiling: 75-80%
How to Use the Buy-to-Let ROI Calculator
- Enter the property purchase price.
- Enter your deposit amount (and the calculator derives the mortgage).
- Enter the expected monthly rent.
- Enter the BTL mortgage interest rate.
- Enter annual expenses (insurance, maintenance, letting fees).
- Select your current personal income tax band.
- Toggle "Limited Company" to compare personal vs corporate structure.
- Review gross yield, net yield, monthly cash flow, annual profit, and return on equity.
Frequently Asked Questions
Is buy-to-let still worth it in 2026?
It depends on your tax band, deposit, and structure. For higher-rate taxpayers with personal BTL mortgages, Section 24 significantly reduces profitability — some heavily-geared properties now produce negative cash flow after tax. Limited Company BTL remains more attractive but has its own costs (Corporation Tax, dividend tax on extraction, tighter lending, accountancy fees). Low-gearing (cash or 50% LTV) BTL in high-yield regions can still work well.
What is Section 24 and how does it affect my BTL tax bill?
Section 24 is the phased change (2017-2020) that removed mortgage interest deductibility for private BTL landlords. Instead of deducting interest from rental income, you now pay tax on full rental income and receive a 20% basic-rate tax credit on the interest. For higher-rate (40%) taxpayers this effectively doubles the tax cost of mortgage interest. The calculator applies Section 24 correctly.
Should I use a Limited Company for buy-to-let?
Limited Company BTL avoids Section 24 and taxes profits at Corporation Tax rates (19% / 25%). It also ring-fences each property from your personal finances. Downsides: Corporation Tax is paid on profits, dividend extraction adds another tax layer, BTL mortgages are more expensive for companies, and there's additional accountancy cost. A common rule of thumb: Limited Company structures start to make sense above 3-5 properties or if you're already in the higher rate band.
How do I calculate BTL gross and net yield?
Gross yield = (annual rent / property value) × 100. For example £1,200/month rent on a £200,000 property = £14,400 / £200,000 = 7.2% gross yield. Net yield subtracts all annual costs (mortgage interest, insurance, maintenance, letting fees, tax) before dividing by the property value. Net yields of 3-5% are typical after expenses and tax.
What is the 5% additional property Stamp Duty surcharge?
Since October 2024, purchases of additional residential properties (second homes, BTL investments) attract an extra 5% Stamp Duty on top of standard rates in England and Northern Ireland. On a £200,000 property this adds £10,000 of tax. Scotland charges 6% (Additional Dwelling Supplement) and Wales charges 4% (higher rates supplement).
Can I offset BTL losses against other income?
No. BTL losses can only be offset against other UK rental profits in the same year or carried forward to offset future rental profits. You cannot offset a BTL loss against employment income or self-employment profits. This is a critical difference from general business losses and one of the reasons Section 24 hurts so much — you can end up with a tax bill even in a loss-making year.
Related Calculators
- Stamp Duty Calculator — includes the 5% additional property surcharge
- Mortgage Repayment Calculator — for the mortgage side of the equation
- Capital Gains Tax Calculator — critical for modelling disposal at sale
- Dividend Income Calculator — for extracting profits from a Limited Company
Official Sources
- Renting out property — paying tax (gov.uk)
- Section 24 — HMRC policy paper
- Corporation Tax rates (for Limited Company BTL)
Last reviewed April 2026. Figures and rules apply to the 2026/27 UK tax year. This tool is for guidance only and does not constitute financial advice.
