MTD for UK Resident Landlords with Foreign Property
If you’re a UK resident landlord owning property abroad, keeping up with tax obligations can feel complicated. You already manage tenants, maintenance, and local property rules in another country—adding HMRC reporting requirements on top can be overwhelming.
From 2026, Making Tax Digital (MTD) for Income Tax is being rolled out for landlords with UK property income, and it also affects landlords with foreign property income in some cases. MTD changes the way income and expenses are recorded and reported to HMRC, moving from a single annual Self Assessment return to digital record-keeping and quarterly submissions.
This guide is written specifically for UK residents who earn rental income from overseas properties. We’ll break down step by step what MTD means for you, who it applies to, and how to set up your digital systems so you stay compliant without letting tax paperwork take over your life.
What MTD Actually Changes for Foreign Property Landlords
Making Tax Digital doesn’t change how much tax you pay on your foreign rental income—it simply changes how and when you report it to HMRC. Instead of filing a single annual Self Assessment return, landlords now need to keep digital records and submit information more frequently.
For UK-resident landlords, this means tracking all rental income from overseas properties, including rent received, deposits, and any service charges collected from tenants. It also includes recording all allowable expenses, such as property management fees, maintenance costs, insurance, mortgage interest, and other costs directly related to the property’s operation. By maintaining these records digitally, you ensure everything is organised and ready for HMRC reporting.
Landlords will then submit quarterly updates summarising this income and these expenses. These updates are informational—they show HMRC what you’ve earned and spent so far, but do not calculate your final tax bill. At the end of the tax year, a final declaration confirms the totals and calculates any tax due.
By following these steps, landlords gain a clearer, ongoing picture of their tax position. Digital record-keeping and quarterly submissions reduce errors, minimise the risk of HMRC queries, and make year-end tax reporting for overseas properties much more manageable.
Step-by-Step Guide to Making Tax Digital for Foreign Property Landlords
Step 1: Check Whether MTD Applies and Start Digital Records
The first step for UK resident landlords with foreign properties is to determine whether Making Tax Digital applies to your rental income. From 2026, MTD is mandatory if your total overseas rental income exceeds £50,000 per year, with phased thresholds reducing to £30,000 from 2027 and £20,000 from 2028. Once you know that MTD applies to your situation, the next priority is to start keeping digital records. This means recording all rental income, including rent payments, deposits, and service charges, as well as all allowable expenses such as property management fees, repairs, insurance, and mortgage interest. Keeping receipts, invoices, and bank statements in a digital format ensures your records are organised and easily accessible. By doing this from the outset, you make quarterly submissions and the year-end declaration much smoother, and reduce the risk of mistakes or missing information.
Step 2: Understanding What MTD Changes for Foreign Property Landlords
Making Tax Digital doesn’t change how much tax you pay on your overseas rental income, but it does change how and when you report it to HMRC. Instead of submitting a single Self Assessment at the end of the year, you will now need to maintain digital records throughout the year and submit quarterly updates summarising your income and expenses. This ongoing reporting helps you monitor your tax position and reduces the risk of errors at year-end. For foreign property landlords, this means tracking all rental income, including rent, deposits, and service charges, as well as allowable expenses such as property management fees, repairs, insurance, and mortgage interest. At the end of the tax year, a final declaration reconciles your totals and calculates any tax due. By adopting this new system, landlords gain a clearer view of their finances and can ensure compliance without the last-minute stress of traditional year-end filings.
Step 3: Submitting Quarterly Updates for Foreign Property Income
Once your digital records are set up, the next step is to submit quarterly updates to HMRC. These updates are required for all UK resident landlords whose foreign rental income falls within the MTD thresholds. Unlike the traditional Self Assessment, quarterly updates are informational, showing HMRC your income and expenses to date rather than calculating the final tax owed. For landlords, this includes reporting rental income, deposits, and any additional charges collected from tenants, as well as allowable expenses such as property management fees, repairs, insurance, and mortgage interest. Submitting these updates regularly helps you keep your records accurate, monitor your tax position throughout the year, and avoid last-minute stress at year-end. Most MTD-compatible software will provide reminders and guide you through the process, making it manageable even for landlords with multiple overseas properties. By keeping on top of quarterly updates, you create a smoother, more organised approach to tax reporting.
Step 4: Completing the Final Declaration for Foreign Property Landlords
At the end of the tax year, after submitting your quarterly updates, you will complete a final declaration to HMRC. This step reconciles all your overseas rental income and expenses for the year and calculates your final tax liability. For foreign property landlords, this includes reviewing total rent received, deposits, and any service charges, alongside all allowable expenses such as property management fees, repairs, insurance, and mortgage interest. Using your MTD-compatible software, you can ensure that all your quarterly updates are accurate and make any necessary adjustments before submitting the final declaration. Completing this step correctly ensures that HMRC has a full and accurate picture of your foreign rental income and reduces the risk of queries or penalties. By keeping digital records up to date and submitting quarterly updates consistently, the final declaration becomes a straightforward process rather than a stressful, last-minute task.
Common Mistakes Foreign Property Landlords Make with MTD
1. Incomplete Digital Records
One of the most frequent mistakes is failing to keep all records digitally. Some landlords still rely on paper receipts or multiple unorganised spreadsheets, which can make quarterly submissions difficult and increase the risk of errors. Keeping everything in one digital system ensures smoother reporting and easier year-end reconciliation.
2. Misclassifying Expenses
Landlords often misclassify expenses, such as including personal costs or failing to separate property-related expenses, including repairs, insurance, and management fees. Accurate categorisation is crucial for proper reporting and to avoid HMRC queries.
3. Missing Rental Income
It’s easy to forget certain sources of foreign rental income, including deposits, service charges, or occasional short-term rental fees. Omitting these can lead to underreporting and potential compliance issues.
4. Late or Inconsistent Submissions
Submitting quarterly updates late or irregularly is a common problem. MTD requires timely reporting, and falling behind can trigger penalties or raise HMRC questions.
5. Using Unapproved Software or Delaying Setup
Some landlords either delay linking their software to HMRC or use non-MTD-approved systems. Without properly linked software, submissions may be invalid, causing unnecessary complications.
By being aware of these common mistakes, foreign property landlords can take steps early to stay organised, maintain accurate records, and ensure smooth compliance with MTD.
Tips to Avoid Mistakes with MTD for Foreign Property
1. Keep All Records Digital from the Start
Use a single digital system or MTD-compatible software to record all rental income and expenses. Include deposits, service charges, and any irregular payments. Digital records make quarterly submissions easier and reduce the risk of missing information.
2. Categorise Expenses Accurately
Make sure all expenses are correctly categorised. Separate property-related costs such as repairs, insurance, management fees, and mortgage interest from personal expenses. This ensures compliance and makes the year-end declaration straightforward.
3. Track All Income Streams
Don’t forget any source of rental income. Short-term lets, deposits, or additional fees should be included in your records to avoid underreporting and potential HMRC queries.
4. Submit Quarterly Updates on Time
Set reminders to submit updates every three months. Staying consistent prevents penalties and keeps your tax position clear throughout the year.
5. Use HMRC-Approved Software and Link It Early
Choose MTD-compatible software and link it to your HMRC account as soon as possible. This ensures your submissions are valid and reduces the chance of errors or delays.
6. Review Records Regularly
Take time each quarter to review your digital records. Checking for missing invoices, unrecorded expenses, or incorrect entries will save you headaches at year-end.
By following these tips, UK resident landlords with foreign properties can stay compliant, reduce errors, and make MTD a smooth, manageable process.
Conclusion
Making Tax Digital represents a significant change for UK resident landlords with overseas properties, but with the right approach, it can be managed smoothly. MTD doesn’t change how much tax you pay; it changes how and when you report your income and expenses to HMRC. By keeping accurate digital records, submitting quarterly updates, and completing the final declaration, landlords gain greater control over their tax position and reduce the stress of year-end filing.
The key to success is staying organised from the start. Track all rental income, deposits, and service charges, and keep clear records of allowable expenses such as property management fees, repairs, insurance, and mortgage interest. Use HMRC-approved software, submit updates on time, and regularly review your records to catch errors early.
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By following these steps, foreign property landlords can ensure compliance, avoid common mistakes, and maintain a clear overview of their finances. Starting early and staying consistent makes MTD manageable, allowing you to focus on growing your property portfolio and managing your rentals rather than worrying about tax paperwork.
Sterling & Wells
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