Property abroad and MTD: how a UK resident's foreign rent counts and is reported

Kemi is fictional, but her situation is one that many families will recognise. She is a nurse who has lived and worked in the UK for years, and she lets a small flat in Leicester. She also owns an apartment in Lagos that she lets on her own, and she and her brother let the family house in Ibadan together. She has always put the rent from Nigeria on her Self Assessment return, but when she read about Making Tax Digital (MTD) for Income Tax she was not sure whether HMRC would count the rent from abroad, or how she would keep records for houses in another country. This guide walks through what GOV.UK says about each of those questions.

This guide is for people who live in the UK. If you live abroad and let property in the UK, the rules are different, and the guide for landlords who live abroad covers that situation instead.

Whether rent from abroad counts towards the MTD test

MTD for Income Tax starts with your qualifying income, which is the figure HMRC compares with the threshold. For someone who lives in the UK, GOV.UK’s guidance on working out qualifying income is clear that property abroad is part of that figure. If you were UK tax resident in the 2024 to 2025 tax year, HMRC checks your qualifying income by looking at the Self Assessment tax return you submitted for that year, which includes your self-employment income and your UK and foreign property income. GOV.UK gives the example of someone who is a sole trader in the UK and rents out a property in France, and says that both income sources count towards their qualifying income.

That matters because the rent from abroad is easy to think of as separate from your UK affairs, particularly when it is paid into a bank account in another country. For the MTD test, though, it sits alongside your UK rent and any self-employment income. GOV.UK explains the rule using your tax residence in that one tax year and the return you filed for it. If your residence has changed since then, or you are unsure whether you count as UK tax resident at all, an accountant or tax adviser can help you check before you rely on the answer.

A worked example with Kemi

The figures in this section are an illustration only, shown in pounds. They are not GOV.UK figures and do not describe any real person, but they show why the foreign rent can change the answer.

Suppose the Leicester flat brings in £11,000 a year in gross rent, the Lagos apartment £9,000, and the Ibadan house £12,000, which Kemi and her brother share with a 50% share each. Kemi’s share of the house is £6,000, so her rent from abroad comes to £15,000, and her qualifying income is £26,000.

If those were her figures for the year HMRC tests, her qualifying income would be over the £20,000 threshold that applies from 6 April 2028. Had she counted only the Leicester flat, she would have been at or under every threshold in the current timeline, down to the £20,000 step from 6 April 2028. The difference comes entirely from the rent abroad, which is why it is worth including from the start rather than finding out later.

Why property abroad is its own business for MTD

Once you are using MTD, the way your properties are grouped decides how many sets of quarterly updates you send. GOV.UK treats property in the UK and property abroad as two different businesses. If you have one or more properties in the UK, they are legally treated as one ‘UK property business’, and you do not need to create separate digital records for each UK property. Property abroad is grouped in the same way, into a business of its own. All of your foreign properties are legally treated as one ‘foreign property business’, including your share of any jointly let foreign properties, so your compatible software adds the separate digital records together into one quarterly update.

So Kemi has two property businesses for MTD: a UK property business made up of the Leicester flat, and a foreign property business made up of the Lagos apartment and her share of the Ibadan house. Grouping the properties abroad together does not depend on them being in the same country, as GOV.UK describes all of your foreign properties as one business.

How the records work, property by property

The record-keeping is where property abroad differs most from UK property, and GOV.UK sets it out in its guidance on creating digital records. If you have foreign property income, your digital records cover the foreign property income you receive and the expenses you incur. The difference is in how the records are split. You must create separate digital records:

• for each individual foreign property you receive income from
• for your share of the income and expenses if your foreign property is jointly let

That is a stricter rule than the one for UK property, where you do not need separate records for each property. For Kemi, it means the Lagos apartment and her share of the Ibadan house each have their own records in her software, even though they end up in the same quarterly update. Keeping them apart from the first transaction is much easier than untangling a mixed set of entries later.

There is also a lighter option for how much detail you record. GOV.UK lists foreign income among the cases in which you can choose to categorise your digital records in less detail for a tax year, and it says that the turnover threshold that applies to simpler categorisation does not apply to foreign property income. It does not set out on that page exactly what the simpler categories look like for property abroad, so it is worth checking how your software handles this before you choose the lighter option.

GOV.UK’s MTD pages do not say how to convert rent received in another currency into pounds, or how tax paid in the other country should be recorded. If either applies to you, an accountant or tax adviser can tell you how to handle it on your return.

How property abroad shows in your quarterly updates

Quarterly updates follow the business grouping rather than the individual properties. Every 3 months, your compatible software adds together your digital records for each business you have, and you send your quarterly updates to HMRC for each self-employment and property business. In Kemi’s case, that means one set of updates for her UK property business and another for her foreign property business, with her software adding up the separate records for Lagos and Ibadan into the foreign one.

Quarterly updates are summaries, not tax returns, and HMRC does not receive the details of individual digital records, such as a receipt or invoice. The detail stays in your own records, which is another reason to keep each property abroad tidy and separate. The guide to your first quarterly update walks through how the first one works. Penalties are covered in the MTD penalties guide.

What changes when the property abroad is jointly let

Many family properties abroad are shared, as Kemi’s house in Ibadan is with her brother. GOV.UK says your share of a jointly let foreign property is part of your one foreign property business, and that you keep separate digital records for your share of the income and expenses if your foreign property is jointly let. In other words, Kemi records her own share of the house, kept apart from the Lagos apartment, and her brother’s share does not belong in her records.

GOV.UK also describes some simpler options for jointly let property in general terms, such as leaving the shared expenses out of the updates during the year. Its pages do not say whether those options work any differently for property abroad, so if you plan to rely on them, it is worth confirming with your software provider or an adviser first. The guide for joint property owners explains how each owner’s share is counted and what those options involve.

Choosing software that covers property abroad

Not every MTD product supports foreign property income, so this is the first thing to check. HMRC does not provide software, but its find software tool lets you check the software covers all your income sources, which is the check that matters most here. The software selector and the software comparison can help you build a shortlist, but Acrenvo’s dataset does not record foreign property support for every product, so confirm it with the provider before you subscribe.

The MTD threshold calculator asks for UK property income and has no separate field for rent from abroad, so if you use it, keep in mind that your rent from abroad belongs in the total as well, as it does in Kemi’s example. The main MTD guide covers the wider rules if you would like the background first.

Questions about property abroad and MTD