ROI Calculator — UK
Calculate your return on investment (ROI) and annualised return for any UK investment in pounds sterling.
Enter investment details and click Calculate ROI
ROI Calculator UK — Measure the True Return on Any Investment
Return on Investment (ROI) is the most fundamental measure of investment performance — it tells you how much profit you made as a percentage of what you invested. Whether you're evaluating a buy-to-let property, a Stocks and Shares ISA, a business investment, or a savings account, ROI gives you a standardised way to compare different opportunities and make informed financial decisions.
In the UK, common investment benchmarks include the FTSE 100 (which has returned approximately 7%–8% annually including dividends over the long term), buy-to-let property (rental yields of 4%–7% plus capital appreciation), and Cash ISAs (currently 4%–5% AER). Understanding your actual ROI — and comparing it to these benchmarks — helps you decide whether your money is working as hard as it could be.
What is ROI?
ROI (Return on Investment) expresses the gain or loss from an investment as a percentage of the original cost. It's a simple, universally understood metric used to evaluate everything from property investments to business decisions to stock portfolios.
- ROI = (Net Profit ÷ Cost of Investment) × 100. A £10,000 investment that returns £12,500 has an ROI of 25%.
- Annualised ROI adjusts for time, allowing fair comparison between investments held for different periods. A 25% ROI over 2 years is approximately 11.8% annualised.
- For property, UK investors often calculate gross yield (rental income ÷ property value) and net yield (after deducting mortgage costs, maintenance, letting fees, and tax).
- Remember to account for UK taxes — Capital Gains Tax (CGT) on property and investments, Stamp Duty Land Tax (SDLT) on property purchases, and income tax on rental income all affect real ROI.
How to Use This Calculator
- Enter the Initial Investment in pounds — what you paid (e.g., £50,000 for a BTL deposit, £10,000 for an ISA).
- Enter the Final Value — what the investment is now worth (e.g., £65,000).
- Enter any Additional Income received (e.g., rental income or dividends in pounds).
- Enter the Investment Period in years for annualised ROI.
- Click Calculate to see total ROI, annualised ROI, and net profit.
ROI Formula
- Net Profit = Final Value + Income Received − Initial Investment
- Annualised ROI = (1 + ROI/100)^(1/years) − 1
- Example: £50,000 invested, £65,000 final value, £6,000 rental income, 3 years
- Net Profit = £65,000 + £6,000 − £50,000 = £21,000
- ROI = (£21,000 ÷ £50,000) × 100 = 42% total | 12.4% annualised
Key Terms
- Capital Gains Tax (CGT)
- UK tax on the profit from selling an asset. For property (excluding your main home), CGT is charged at 18% (basic-rate taxpayers) or 24% (higher-rate taxpayers) on the gain above your annual CGT allowance (£3,000 in 2024/25). For shares and investments held outside an ISA, rates are 10%/20%. CGT significantly affects real ROI on property and investment sales.
- Gross Yield vs Net Yield
- Used in UK buy-to-let analysis. Gross yield = annual rental income ÷ property value × 100. Net yield deducts mortgage interest, management fees (typically 10%–15%), maintenance, insurance, and void periods. UK net buy-to-let yields typically range from 3%–5%, depending on location and property type.
- Stamp Duty Land Tax (SDLT)
- UK tax paid when purchasing property. Buy-to-let and second home buyers pay an additional 3% surcharge on top of standard SDLT rates. SDLT is a significant upfront cost that reduces initial ROI — a £250,000 BTL purchase incurs SDLT of approximately £10,000. Wales uses Land Transaction Tax (LTT); Scotland uses Land and Buildings Transaction Tax (LBTT).
- FTSE 100 / FTSE All-Share
- The main UK stock market indices. The FTSE 100 tracks the 100 largest companies listed on the London Stock Exchange. Long-term UK equity investors typically benchmark against the FTSE All-Share or a global index. UK-listed index funds and ETFs tracking these indices are widely available in ISAs and pensions.
- Section 24 (Mortgage Interest Relief)
- A UK tax change that limits the mortgage interest relief landlords can claim on rental income. Since 2020, landlords can only claim a 20% basic-rate tax credit on mortgage interest — previously they could deduct the full interest. This has significantly reduced net yields for higher-rate taxpaying landlords and must be factored into BTL ROI calculations.
Tips for UK Investors
- Always calculate after-tax ROI for UK investments — CGT on property gains, SDLT on purchase, and income tax on rental income all materially reduce returns.
- Use your ISA and pension allowances first — returns within these wrappers are free of income tax and CGT, boosting your effective ROI significantly.
- For buy-to-let, calculate net yield rather than gross yield — factor in mortgage payments, Section 24 tax implications, agency fees, maintenance (budget 1% of property value/year), and void periods.
- Compare your investment ROI against a simple global index fund in a Stocks and Shares ISA — passive investing often outperforms active strategies after fees and tax.
- The CGT annual allowance (£3,000 in 2024/25) has been significantly reduced — plan asset disposals carefully with a tax adviser to manage CGT liability.
- For business investments, ROI doesn't capture risk — a higher ROI is only better if the risk is proportionate. Consider using IRR for comparing business investments of different durations.
Frequently Asked Questions
A gross rental yield of 5%–8% is generally considered good for UK buy-to-let. Net yields (after costs and tax) are typically 2%–5%. High-yield areas include parts of the North West, Yorkshire, and Scotland, while London and the South East tend to have lower yields but stronger capital growth historically. The best overall ROI combines rental yield with capital appreciation, minus SDLT, CGT, and ongoing costs.
CGT is charged on the profit above the annual exempt amount (£3,000 in 2024/25) when you sell property (excluding your main home) or shares held outside an ISA. Property gains are taxed at 18%/24%; investment gains at 10%/20% depending on your income tax band. On a £100,000 property gain, a higher-rate taxpayer pays around £23,280 in CGT — substantially reducing ROI. Holding investments within an ISA eliminates this entirely.
The UK and global stock markets have historically returned 7%–9% annually (nominal) over long periods, including dividends. In real (inflation-adjusted) terms, this is approximately 4%–6%. Past performance doesn't guarantee future returns, and annual returns vary significantly. For planning purposes, UK financial advisers often use 5%–7% as a long-term assumption for diversified equity portfolios. Low-cost index funds tracking the FTSE All-World tend to outperform most actively managed funds after fees.
Buy-to-let ROI has been squeezed by Section 24 mortgage interest relief restrictions, SDLT surcharges, higher mortgage rates, and increased regulation. Net yields of 3%–5% are achievable in higher-yield areas, and some landlords benefit from strong capital appreciation. However, for many higher-rate taxpaying landlords, post-tax returns now compare unfavourably with a low-cost Stocks and Shares ISA. Each investment must be evaluated on its own merits — speak to a tax adviser before purchasing.
Total investment cost = purchase price + SDLT + legal fees + survey + refurbishment. Annual net income = rental income − mortgage interest (Section 24 adjusted) − agent fees − maintenance − insurance − void periods − income tax on profit. ROI = (annual net income + annual capital appreciation) ÷ total investment cost × 100. For a leveraged BTL purchase, calculate both cash-on-cash return (on deposit only) and total property ROI.
ROI measures total return over the full investment period as a percentage. CAGR (Compound Annual Growth Rate) measures the annual growth rate that would produce the same total return if compounding consistently each year. CAGR is more useful for comparing investments held for different periods. For example, a 50% total ROI over 3 years equals a CAGR of approximately 14.5% per year. This calculator shows both figures.