2026 is shaping up to be an interesting year for UK landlords: the new Renters’ Rights Act starts to apply from 1 May 2026, and HMRC’s Making Tax Digital (MTD) scheme is hot on its heels, meaning that those who earn rental income will have more on their plate come April.
But how do these fresh MTD changes impact landlords living abroad? HMRC’s Making Tax Digital (MTD) scheme is hot on its heels, meaning that those who earn rental income will have more on their plate come April.
But how do these fresh MTD changes impact landlords living abroad?
For one, MTD will soon apply to non-resident landlords whose total gross qualifying income – from UK and overseas property, plus any UK sole trade earnings – hits HMRC’s set thresholds.
In this guide to MTD for expat and international landlords, I’ll be answering all the common questions clients bring to me as a seasoned UWM accountant, from upcoming threshold changes to your ongoing responsibilities. Let’s crack on.
Do Overseas Landlords Need MTD for UK Rental Income?
- From April 2026, MTD for landlords will apply to individuals with over £50,000 qualifying income (gross income from self-employment and/or property) based on their 2024/25 Self Assessment return. Thresholds then fall to £30,000 from 6 April 2027 and £20,000 from 6 April 2028.
- UK tax residents generally count worldwide property income when determining qualifying income; non-UK residents generally count UK property income and UK self-employment income reported on the UK return.
- If you do not have a UK National Insurance number, you are automatically exempt and cannot sign up (for that year).
- To avoid penalties later down the line and minimise stress, eligible landlords should register soon after 6 April 2026 to get to grips with MTD-compliant accounting software and understand their reporting responsibilities.
A Refresher on Making Tax Digital
Making Tax Digital has been on the government’s back burner for the best part of a decade.
Announced back in 2015 and subject to numerous delays and phased rollouts, the scheme is finally reaching UK landlords, marking a milestone shift in how we interact with rental income, from reporting to taxation.
What It Is
Making Tax Digital is a government-led initiative to digitise the tax system.
Under the scheme, landlords, sole traders and businesses will be required to adopt MTD-compliant paperless record-keeping and submit quarterly updates to HMRC using compatible software, then complete an end-of-period statement and final declaration each year in order to ‘bring the tax system closer to real-time’.
Some arms of the initiative, namely MTD for VAT, are already in place, but 2026 is the year to watch for landlords, both living in the UK and abroad.
Its Purpose
Making Tax Digital is the Treasury’s bid to standardise tax affairs throughout the country, bringing methods up to date, so HMRC has a more accurate picture of the economy.
It follows suit after similar crackdowns on digital sales reporting on eBay and other third-party platforms.
The idea with MTD for landlords, though, is that digital and cloud-based alternatives to old-school ledgers and spreadsheets will reduce error, improve compliance, simplify tax prep, and promote a more efficient, productive business climate.
What’s Wrong with Staying Manual?
For many British property owners, however, MTD might ring alarm bells – the extra due diligence translating to a treacherous learning curve, a scramble to get compliant or just a whole lot more paperwork.
But as I frequently tell my clients, rest assured, it’s better to view this shift as an opportunity rather than a hassle.
Once you’re all set up, MTD can slot frictionlessly into how you already manage your finances and actually save you time and money through streamlined, more accurate record-keeping.
Wave farewell to rifling around for old receipts and rent records!
And that’s all without mentioning the penalties you may face from failing to disclose your rental income or missing the quarterly deadlines.
MTD Income Thresholds for Landlords
Because of the steady phase-in of these new measures, the mandatory MTD income thresholds are set to lower as its scope gradually widens. If your qualifying income is over:
- £50,000 for the 24/25 tax year, you need to use it by April 2026
- £30,000 for the 25/26 tax year, you need to use it by April 2027
- £20,000 for the 26/27 tax year, you need to use it by April 2028
Qualifying Income
For the uninitiated, ‘qualifying income’ simply refers to the gross total income from all sources of self-employment and property; it’s this sum from your Self-Assessment tax return that HMRC uses to work out if and when you must comply with the MTD rules above.
Qualifying income sources include:
- UK rental income (and foreign rental income if you are UK tax resident and report it on your UK return).
- Income from sole trader businesses
- Your share of income from a jointly owned property
- Other foreign property income (e.g., the receipt of premiums)
- A mix of the previous
This means that if you’re both a landlord and a sole trader, you need to factor both streams of income into your MTD registration.
Do also note that the property income, which doesn’t appear on your tax return because it is covered by the Rent-a-Room Relief (currently £7,500) or property allowance (£1,000), doesn’t count towards the MTD gross income threshold.
To provide an example:
If Matias, a UK national living in Portugal, and UK tax resident for the 2024/25 tax year earns £30,000 turnover from a British rental, and then £25,000 from a Portuguese villa from his 2024/2025 tax return (due 31st January 2026), his total gross income of £55,000 would exceed the £50,000 threshold.
This means that he needs to comply with HMRC’s MTD rules by 6th April 2026 and register asap.
Siobhan, settled in Ireland, however, only earned £48,000 in the same tax year: £35,000 from her sole trader earnings and then the remaining £13,000 from a UK flat, from which £1,000 was deducted via the property allowance.
Because she doesn’t quite scrape the threshold, she’s not required to register for MTD.
Nonetheless, her accountant advises her to prepare for the change as she is likely to meet the £30,000 threshold in the next tax year (25/26).
What It Means for Landlords Living Abroad
One of the first questions overseas landlords ask me, whether they’re resettled in sunny Australia or closer to home in the EU, is do all landlords have to go digital?
How does it affect reporting tax on rental income? Allow me to explain…
If You’re a UK Tax Resident but Live Overseas
UK tax residents who live overseas still need to register for MTD if they have rental income that meets the thresholds listed above.
That includes worldwide property income, meaning rental income from both UK and foreign properties is counted when assessing whether MTD applies.
If You’re a Non-UK Tax Resident and Live Overseas
If you’re not a UK tax resident but you have a National Insurance Number, you will only need to look at your UK-based income; overseas rental income is ignored for MTD thresholds purposes.
At present, individuals who do not have a UK National Insurance number on 31 January before that tax year are exempt from MTD for Income Tax.
This exemption applies regardless of residency status but is expected to be temporary, with HMRC planning to bring more taxpayers into the regime in future phases.
Other exemptions
Besides not possessing a UK National Insurance Number, there are a handful of reasons you might be considered ‘digitally excluded’ by HMRC and, therefore, exempt from MTD.
These include: age, health condition, disability, religion/belief or location with poor internet access.
How to Prepare
To ready themselves for the incoming digital tax transformation, landlords should:
- Double-check their eligibility, considering the income thresholds and UK tax status.
- Sign up for Making Tax Digital on the GOV.UK website.
- Get MTD-compliant software as per the list of government-approved providers and do your research into which suits their needs.
- Start maintaining the relevant records digitally, including rental income, agent invoices and maintenance receipts – making sure to learn the ins and outs of the new platform.
- Consider enlisting the help of a UK accountant for specialist tax advice, support with compliance and double taxation agreements, if necessary.
Making Tax Digital for Non Resident Landlords FAQs
What Does Making Tax Digital Mean for Landlords Living Outside of the UK?
For non-resident landlords with UK rental property, it means a shift to digital record-keeping and quarterly updates to HMRC using compatible software, alongside an end-of-period statement and final declaration.
However, if you don’t have a UK National Insurance number or meet other HMRC criteria due to age, health condition or disability, you may be considered digitally excluded and, therefore, exempt from the scheme.
As a Landlord, Should I be Worried about HMRC’s MTD Income Tax Changes?
Not at all – staying aware of the upcoming thresholds and keeping a clear head is enough. While MTD might seem daunting initially, it’s fairly simple, and once set up, will likely save you time, stress and money by automating the process.
Can I Use Excel for Making Tax Digital?
Yes, you can continue to use Excel for Making Tax Digital; however, you must use it with an HMRC-approved bridging software.
Often, this presents a smooth transition for landlords DIY-ing their MTD updates and declaration, but it’s equally worth weighing up your options among the compliant software – especially if you’ll also need it for your sole trader activities., but it’s equally worth weighing up your options among the compliant software – especially if you’ll also need it for your sole trader activities.
What Records Do I Need to Keep for MTD?
For landlords, MTD requires you to keep a record of all property-related income and expenses using MTD-compatible software.
You’re not required to keep digital copies of receipts and invoices themselves, but you must retain the original supporting documents (or copies) for at least five years after the 31 January submission deadline for that tax year.
UWM Accountant, Jonathan Myers.
