UK Buy-to-Let Net Yield Calculator (2026)

Gross yield is the headline. After-tax cashflow is the reality. This calculator models both, applies Section 24 properly for individual landlords, and stress-tests the result against rate movements you choose.

UK Buy-to-Let Net Yield Calculator 2026

Gross yield, net yield, and after-tax cashflow on a UK BTL — modelled against Section 24 mortgage interest restriction and stress-tested for rate movements.

Property & Finance

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Assumes interest-only mortgage (standard for UK BTL).

Operating Assumptions

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Tax & Stress Test

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Modelled rise added to mortgage rate to test resilience.

Yield & Cashflow Diagnostic

Gross Yield6.24%
Net Yield (pre-finance, pre-tax)4.53%
Annual Mortgage Interest£10,313
Pre-Tax Cashflow£1,006
Income / Corporation Tax Due-£2,465
DSCR (operating profit ÷ interest)1.10x
Cash Invested (deposit + SDLT + fees)£80,000
After-Tax Annual Cashflow
-£1,459
-£122 per month · cash-on-cash -1.82%
Stress Test (7.50%)-£5,008
Estimated SDLT£15,000

Illustrative model only. Assumes interest-only mortgage and steady-state operation in a single tax year. Section 24 credit is applied to individual landlords subject to the standard cap (lower of mortgage interest, property profits, or adjusted total income — simplified here to lower of interest and property profits). Limited company route assumes 25% corporation tax on profit; small-profits rate and marginal relief are not modelled. SDLT estimate uses the April 2025 additional-dwelling schedule and excludes the non-UK resident surcharge. Shaded Canvas is not authorised by the FCA and does not provide tax or mortgage advice. Capital at risk in any deployment.

How the BTL Calculator Works

The model runs a single-year, steady-state projection. Monthly rent is annualised, then reduced by your void assumption to derive effective rent. Three operating costs come out next: maintenance (a percentage of gross rent), letting management (a percentage of collected rent), and a fixed annual figure for insurance and any service charge or ground rent. What remains is operating profit.

The mortgage leg is computed as interest-only on the loan amount (price minus deposit) at the rate you supply. Operating profit minus mortgage interest is pre-tax cashflow. The tax leg then branches by ownership structure.

Individual landlord (Section 24 applies)

Taxable profit equals operating profit — mortgage interest is not deductible. Tax due equals taxable profit times your marginal rate, minus a basic-rate credit of 20% of mortgage interest. The credit is capped at the lower of finance costs and property profits, in line with HMRC's rules. For higher-rate and additional-rate taxpayers this typically removes most or all of the post-2017 cashflow buffer.

Limited company / SPV

Mortgage interest is fully deductible from rental income before tax. The resulting profit is taxed at 25% corporation tax. The calculator does not model the small-profits rate (which can lower effective corp tax for portfolios under £50k of profit) or marginal relief, so this leg is a conservative upper bound on tax due for small portfolios.

Why Section 24 Changes the Maths

Before April 2017, individual landlords deducted mortgage interest from rental income before computing taxable profit. A higher-rate taxpayer effectively received 40% relief on every pound of interest. From April 2020 — when Section 24 finished phasing in — mortgage interest is no longer deductible; landlords receive a flat 20% basic-rate tax credit instead. For a higher-rate taxpayer that is a doubling of the effective tax rate on interest.

The hidden consequence is more painful. Because taxable profit is now gross of interest, a leveraged BTL can show positive taxable profit and negative cashflow in the same year. The landlord pays tax on money that, in cash terms, they did not earn. This is why so many higher-rate landlords transferred portfolios into limited companies between 2017 and 2024 — and why UK buy-to-let economics no longer resemble what they did a decade ago.

The calculator surfaces this directly. Set ownership to Individual, select Higher Rate, and watch how the tax-due figure tracks the tax credit cap. Switch to Limited Company and observe the difference in after-tax cashflow on the same property.

How to Read Your Result

Gross yield is what listing portals quote. It is useful for filtering deals but it ignores costs and tax. The average UK gross yield is around 5-6%; northern stock can sustain 6-8%.

Net yield in this calculator is pre-finance and pre-tax — rent minus operating costs, divided by purchase price. It is the property's standalone earning power. A net yield below 5% on a leveraged purchase at current rates is usually a structural warning.

After-tax cashflow is what actually lands in your bank account. For senior professionals on higher or additional rate, this number is frequently negative on default 2026 assumptions — even with positive net yield. That gap, between apparent yield and actual cashflow, is where the case for unleveraged or institutional deployment routes begins.

DSCR measures how comfortably the property pays its own interest. UK BTL lenders want 1.25 to 1.45 minimum. Below 1.0, the property is loss-making even before personal tax.

The stress test applies your chosen rate uplift to the mortgage rate and recomputes the entire model. A common test is +2% on a current 5.5% rate. If the stress scenario produces after-tax cashflow more than £3,000 negative per year on a standard purchase, the deal is fragile to refinance risk.

The Comparison Most BTL Buyers Skip

Once a BTL produces negative after-tax cashflow, the rationale shifts to capital growth. That is a coherent thesis in markets with consistent appreciation, but it stops being a yield play. For senior professionals modelling capital deployment, the meaningful question becomes: what does the same cash do elsewhere?

Use the idle cash cost calculator to model the opportunity cost of leaving the deposit in cash while you decide. And Model One is the unleveraged, hands-off alternative built for the same capital this calculator is testing — no mortgage exposure, no Section 24, no tenant management.

Related Reading

Frequently Asked Questions

What does this BTL calculator measure?
It runs a single-year, steady-state model of a UK buy-to-let. It surfaces gross yield, net yield before finance and tax, annual mortgage interest, pre-tax cashflow, income or corporation tax due, after-tax cashflow, debt service coverage ratio (DSCR), and a stress test at a higher mortgage rate. It also estimates SDLT on the purchase and computes cash-on-cash return on total cash invested.
How does the calculator handle Section 24?
For individual landlords, mortgage interest is not deducted from rental income to compute taxable profit. Instead, taxable profit equals operating profit (rent minus non-finance expenses), and the landlord receives a basic-rate tax credit equal to 20% of mortgage interest. The credit is capped at the lower of finance costs and property profits — the calculator applies this cap. For higher-rate and additional-rate taxpayers this materially reduces real after-tax cashflow versus a pre-2017 calculation.
What changes if I select Limited Company / SPV?
Mortgage interest becomes fully deductible from rental income before tax, exactly as it was for individuals pre-2017. The post-tax cashflow is then taxed at 25% corporation tax. We do not model the small-profits rate (£0–£50k) or marginal relief, which can lower the effective corp tax rate for smaller portfolios. For higher-rate individual taxpayers, the limited company route typically produces materially better after-tax cashflow on a leveraged BTL.
What mortgage type does the calculator assume?
Interest-only, which is the dominant mortgage type for UK buy-to-let. Repayment mortgages would also include a capital repayment leg, reducing in-period cashflow but building equity. The interest-only assumption is the cleaner basis for comparing yield and cashflow across deals.
Why is my default scenario showing negative cashflow?
Mid-2020s mortgage rates of 5%-6% combined with the Section 24 restriction routinely produce negative after-tax cashflow for higher-rate BTL landlords on gross yields below roughly 7%. The default of 6.24% gross on a £250k property at 5.5% interest, 25% deposit, higher-rate taxpayer is deliberately representative of a typical northern BTL purchase — and it loses money in cash terms. That is the point of the tool. Switch ownership to Limited Company or raise the gross yield to see when the numbers turn positive.
How is DSCR calculated?
DSCR = operating profit ÷ annual mortgage interest. Operating profit is effective rent minus non-finance expenses (voids applied, then maintenance, management, insurance and service charges deducted). UK BTL lenders typically require a DSCR of 1.25 to 1.45 depending on borrower profile. A DSCR below 1.0 means the property does not generate enough income to cover its own interest before tax.
How is the SDLT estimate calculated?
The SDLT estimate uses the April 2025 additional-dwelling schedule for England and Northern Ireland — standard SDLT bands plus a 5% surcharge on every band, applied when the price is £40,000 or more. The non-UK resident 2% surcharge is not included. For a detailed band-by-band breakdown including first-time buyer relief and the non-resident surcharge, use the separate stamp duty calculator.
Is this regulated mortgage or tax advice?
No. The calculator is an illustrative model. Shaded Canvas is not authorised by the FCA and does not provide mortgage, tax, or investment advice. Tax treatment depends on individual circumstances and ownership structure. Mortgage availability and rates depend on lender criteria. Speak to an FCA-authorised mortgage broker and a qualified tax adviser before transacting.

Yield model not working for higher-rate?

See how Shaded Canvas helps senior professionals deploy idle capital into asset-backed UK property income — without mortgages, Section 24, or tenant management.

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