MTD for Overseas Individuals With Rental Income Over £20,000 by April 2028

Making Tax Digital for Income Tax is moving closer for overseas individuals with UK rental income. From 6 April 2028, sole traders and landlords with qualifying income of more than £20,000 in the 2026 to 2027 tax year will need to use Making Tax Digital for Income Tax. For someone living overseas, that matters because UK property income can still keep them squarely inside HMRC’s reporting system.

MTD for Overseas Individuals With Rental Income Over £20,000 by April 2028

The first practical point is that this is not based on net profit. HMRC’s qualifying income test looks at gross income before expenses and taxes. So if an overseas landlord has gross rental income above £20,000, the threshold question becomes very real, even if their actual taxable profit is much lower after costs.

For people resident or domiciled outside the UK, HMRC’s guidance says the MTD for Income Tax rules only apply to their UK self-employment and UK property income. HMRC’s qualifying income guidance also says that where someone was not UK tax resident in the relevant year, the test includes UK property income and self-employment income declared in the UK Self Assessment return. That makes the overseas landlord question surprisingly clear in one important respect: the focus is on the UK income that sits inside the UK tax return, not on income that only exists outside it.

If an overseas individual is caught by MTD for Income Tax from April 2028, the change is not simply a new box on the tax return. They, or their agent, will need to use MTD-compatible software. HMRC says the process involves keeping digital records, sending quarterly updates, and then submitting end-of-year information and a final declaration using compatible software.

What this means in practice

For landlords, HMRC also says digital records should be kept separately for UK and foreign property businesses. In other words, this is not just about a single annual filing date anymore. It is about a more digital reporting process running through the year. That is why overseas individuals with UK rental income would be wise to review their record keeping well before April 2028 instead of waiting until the rules are already live.

Another important point is timing. The April 2028 start date for the more-than-£20,000 group is linked to qualifying income in the 2026 to 2027 tax year. So the question is not only what happens in 2028 itself. It is also what the relevant earlier tax year shows. That gives landlords time to prepare, but it also means waiting until the last moment is usually a bad idea because the threshold test looks back.

There are exemptions, and HMRC says you are automatically exempt if your qualifying income is £20,000 or less. There are also other permanent and temporary exemptions for certain circumstances. But for an overseas landlord with UK rental income above the threshold, the safer working assumption is that MTD may well apply unless a specific exemption takes you out of scope.

The practical message is simple. If you live overseas and have UK rental income above £20,000, April 2028 is now a date worth planning around. The best next steps are to confirm whether your qualifying income is above the threshold, review how your records are kept, and make sure the eventual software and reporting process will not be a last-minute scramble. MTD is supposed to modernise tax reporting. It feels much better when you prepare for it before it becomes urgent.

If this sounds like your situation, the next sensible move is to start an enquiry and explain what UK income you still have and whether HMRC has asked you to file.