New UK buy-to-let calculator: yield, Section 24, CGT exit
There is a new UK buy-to-let calculator. Free, no sign-in, and it runs in your browser. Type a price, rent, deposit and rate, and it works out the yield and the monthly cashflow as you go, then follows the property all the way to the day you sell and hands the gain to the CGT report.
Most rental calculators stop at gross yield. That number flatters a mortgaged landlord, because it ignores the two things that decide whether a buy-to-let actually pays: how mortgage interest is taxed, and what the property costs to buy in the first place.
Section 24, in one example
Take a £250,000 flat let at £1,100 a month, bought with a 25% deposit (£62,500) on a 5.5% interest-only mortgage, with 10% management, 5% voids and £600 of other costs. Add £15,000 of stamp duty and £1,500 of legal fees and the cash actually invested is £79,000.
Before tax the deal makes a slim £374 a year. Since April 2020 an individual landlord cannot deduct mortgage interest from rental income; the profit is taxed in full and then cut by a credit worth 20% of the interest. A higher-rate landlord is taxed at 40% on £10,686 of rental profit, gets a £2,063 credit back, and pays £2,212. That turns a small paper profit into a real loss of £1,838 a year. Held in a company, the same £10,313 of interest is a normal expense, so profit is £374 and Corporation Tax at 19% is just £71.
| Year one | Higher-rate, personal | Limited company |
|---|---|---|
| Gross yield | 5.28% | 5.28% |
| Net yield | 4.27% | 4.27% |
| Cashflow before tax | +£374 | +£374 |
| Tax on the year | £2,212 | £71 |
| Cashflow after tax | −£1,838 | +£303 |
| Total return at 2% growth | 4.00% | 6.71% |
Same flat, same rent, same mortgage. See it for yourself: the higher-rate personal version against the same deal in a company. The calculator also runs the lender’s interest-cover test: at a 5.5% stress rate the rent covers interest 1.28 times, which clears a company’s 1.25 floor but fails the 1.45 an individual higher-rate borrower usually needs.
Stamp duty knows which nation you are in
The purchase tax is worked out for you, with the additional-dwelling charge on by default. England and Northern Ireland use SDLT, Wales uses LTT with its own higher-rate band table, and Scotland uses LBTT plus the 8% Additional Dwelling Supplement on the whole price. Switch the nation and the £15,000 in the example above changes with it. Scotland also maps the tax band to its own Income Tax rates, so the Section 24 sum uses 42% for a higher-rate landlord rather than 40%.
Growth is geared, and the chart shows it
Rental cashflow is only half the return. The projected-growth input applies to the whole property value, so with a mortgage it is geared against the cash you put in. At 2% a year the £250,000 flat gains £5,000, which on a £79,000 stake is worth far more than 2% on your money, and it is the reason the total-return column pulls ahead of the cashflow line. An interactive chart plots post-tax cashflow and the growing property value across the full mortgage term. Set growth to 0 to judge the deal on rent alone, or go negative to stress a downturn.
Purchase to rent to sale, in one place
This is the part other rental tools skip. A buy-to-let is a full cycle, and the tax at the end is a different tax from the one on the rent. When you model the sale, the calculator carries the numbers over to the main CGT calculator, where private-residence and letting relief, the annual exempt amount and your remaining basic-rate band are all applied to the disposal. The yield tool answers “should I buy this”; the CGT report answers “what do I owe when I sell”, and now the two are joined up.
What it does not do
It models a single property as a year-one snapshot at today’s rate. For a company it stops at Corporation Tax and does not model taking the profit out as dividends, so treat the company figure as pre-extraction. Associated-company scaling of the profit limits, HMOs, holiday lets and refurbish-refinance strategies are out of scope. It is a planning estimate, not tax advice. Every band and formula it uses is listed in the documentation chapter.
Sources
- Tax relief for residential landlords: Section 24 – GOV.UK
- Stamp Duty Land Tax – GOV.UK
- Land Transaction Tax rates and bands – gov.wales
- Land and Buildings Transaction Tax – revenue.scot
- Capital Gains Tax rates – GOV.UK