The UK’s tax system is undergoing one of its biggest transformations in decades. Under Making Tax Digital (MTD), HM Revenue and Customs are fundamentally changing how income is recorded and reported for landlords.
It means for many, instead of filing a self assessment tax return once per year, you now have to submit 5 sets of tax information to HMRC (4 quarterly + 1 final).
For expat landlords with UK property, the impact is real, immediate, and in some cases, more complex than for UK residents. Here’s what you need to know.
What is Making Tax Digital (MTD)?
MTD for Income Tax is a system requiring landlords and sole traders to keep digital records and submit tax updates quarterly using compatible software.
From 6 April 2026, landlords must comply if their total annual income from property and/or self-employment exceeds £50,000.
This is just the beginning:
- From 2027 the threshold reduce to £30,000
- And then £20,000 threshold from 2028
Over time, most landlords—including smaller ones—will be drawn into the system.
Does MTD apply to expat (non-resident) landlords?
Yes. According to HMRC guidance, non-residents must follow MTD rules for their UK property income.
In practice:
- If you live abroad but earn UK rental income, MTD still applies
- You are treated the same as a UK-resident landlord if you meet the income threshold
Although there is stric§ tly no automatic exemption for individuals who are not tax resident in the UK – HMRC have advised that anyone who completed the SA109 supplementary pages as part of their 2024/25 self assessment tax return will not be brought into Making Tax Digital until April 2027 – one year later than the normal start date.
It’s likely you’ve only completed this if you were already living overseas in 2024/25, if you’ve moved abroad since, the exemption won’t apply.
What are the key changes expat landlords need to understand?
1. Quarterly Reporting (Instead of Annual Returns)
MTD replaces the traditional once-a-year Self Assessment process with:
- 4 quarterly updates
- 1 final end-of-year submission
These updates summarise income and expenses, rather than full tax calculations, but they significantly increase reporting frequency.
2. Mandatory Digital Record-Keeping
Landlords must:
- Keep digital records of income and expenses
- Use HMRC-compatible software to submit data
Spreadsheets alone are no longer sufficient unless linked via “bridging software.”
3. Income Threshold Based on Gross Revenue
MTD thresholds are based on gross income (before expenses), not profit.
This includes:
- All UK rental income
- Combined income across multiple properties
- Property + self-employment income combined
4. Separate Reporting for UK and Overseas Property
Where landlords have both UK and overseas property:
- Each property business may require separate digital records and submissions
Impact for expats:
- Increased administrative complexity
- Potential duplication of reporting processes
5. Phased Expansion Means More Landlords Will Be Affected
While the £50,000 threshold applies first, it will drop to £20,000 by 2028.
Impact for expats:
Even small-scale landlords living abroad will likely fall within scope in the near future.
What are the practical challenges for expat landlords?
Reliance on Agents
Many expat landlords use UK accountants. Under MTD:
- Agents can submit on your behalf
- But you still need to maintain digital records and provide timely data
Software & Accounting Costs
MTD requires compatible software, often subscription-based, adding ongoing costs. For landlords relying on accountants, some expect it could cost an extra £2,500 in accountants fees.
How should expat landlords prepare?
Based on HMRC guidance, key steps include:
- Check your qualifying income – Confirm whether you exceed the threshold.
- Choose MTD-compatible software – Ensure it supports UK property income reporting for non-UK residents.
- Digitise your records early – Don’t wait until April 2026.
- Coordinate with your accountant – Especially important if you’re overseas.
- Plan for quarterly workflows– Treat tax as an ongoing process, not an annual event.
