Methodology
Every figure on this site is worked out from published HMRC and UK tax rules for the 2026/27 tax year. Here is exactly what each calculator uses, and where the rules come from.
Stamp Duty Land Tax applies to property in England and Northern Ireland. We use the residential rates in force from 1 April 2025: nil up to £125,000, 2% to £250,000, 5% to £925,000, 10% to £1.5m and 12% above. First-time-buyer relief gives 0% to £300,000 and 5% to £500,000 on purchases up to £500,000. Additional properties (second homes and buy-to-let of £40,000 or more) carry a 5% surcharge on every band. Scotland and Wales run their own systems, each with a dedicated calculator on this site: Scotland's LBTT uses bands of 0/2/5/10/12% from £145,000, first-time-buyer relief to £175,000 and a flat 8% Additional Dwelling Supplement; Wales's LTT uses main rates from a £225,000 threshold (no first-time-buyer relief) and a separate higher-rate band table for additional properties from 11 December 2024.
We use rest-of-UK income tax bands for 2026/27: a £12,570 personal allowance (tapered away above £100,000), 20% to £50,270, 40% to £125,140 and 45% above. Landlords holding property personally are taxed under Section 24 — mortgage interest is not deductible from rental profit; instead a basic-rate (20%) tax credit is given on finance costs. Rental profit is stacked on top of your other income, so it can push you into higher bands.
For company ownership we apply Corporation Tax for the financial year beginning April 2026: 19% on profits up to £50,000, 25% above £250,000, with marginal relief (a 3/200 fraction) in between. Companies deduct mortgage interest in full. The analyser does not model extracting profit as dividends, which is taxed again — we note this in the tool.
The projection applies residential-property CGT for 2026/27: an £3,000 annual exempt amount, then 18% on gains within your remaining basic-rate band and 24% above, with the gain stacked on top of income to decide the split. Company gains are taxed within the company at Corporation Tax rates instead.
Repayments use the standard amortising formula M = P·r·(1+r)ⁿ ÷ ((1+r)ⁿ − 1), where r is the monthly rate and n the number of months. Interest-only payments are simply the balance times the monthly rate. The overpayment tool simulates the balance month by month. All figures assume a constant interest rate; real rates change at the end of each deal.
The buy-to-let interest cover ratio is indicative: we check rent against 125% of mortgage interest (145% for higher-rate taxpayers) at a 5.5% stress rate. Real lenders set their own ratios and stress rates, so treat this as a guide.
This model compares net worth after a chosen number of years. The buyer builds home equity (a growing property value, less the mortgage and a 1.8% sale cost). The renter invests the same upfront cash, plus the monthly difference between owning and renting, at an investment return you choose, with 1% a year assumed for maintenance. The result is highly sensitive to the house-growth and investment-return assumptions, which is the point — change them to test it.
Rates are taken from GOV.UK and HMRC guidance. This page and the calculators are reviewed each tax year; last reviewed June 2026 for 2026/27. Nothing here is personal advice — see our disclaimer.