MTD for non-resident landlords with UK property

Elena is fictional, but her situation is familiar. She lives in Lisbon and still owns a flat in Manchester. She reports the rent through UK Self Assessment. Whether Making Tax Digital for Income Tax applies to her depends on three separate checks: her qualifying income, whether she has a National Insurance number, and whether the SA109 deferral applies.

Those checks are separate from the Non-resident Landlord Scheme. The scheme decides whether tax is deducted before Elena receives her rent. Making Tax Digital decides how she keeps records and reports her income to HM Revenue & Customs (HMRC).

Start with the UK income reported on your tax return

Qualifying income is your gross income from property and self-employment before expenses. If you are not UK tax resident, HMRC includes your UK property income and any self-employment income declared on your UK Self Assessment return. Foreign property income and overseas self-employment income that you do not declare on that return do not count.

HMRC explains this distinction in its guidance on working out qualifying income for Making Tax Digital. A UK resident follows a different rule because their UK and foreign property income can both count.

Suppose Elena receives £38,000 of gross UK rent in the 2025 to 2026 tax year and has no UK self-employment. Her qualifying income is £38,000. Property expenses may reduce her taxable profit, but they do not reduce this threshold figure. That amount is above the £30,000 threshold for the 2027 to 2028 tax year.

Check your National Insurance position before each tax year

You are automatically exempt from Making Tax Digital if you do not have a National Insurance number before the start of the tax year. You do not need to apply, and HMRC says the exemption continues unless your circumstances change. You must still report your income through Self Assessment.

Receiving a National Insurance number after the tax year starts does not remove the exemption for that year. It may change your position for a later year, so check again before the following 6 April. HMRC sets out this rule in its Making Tax Digital exemption guidance.

Elena worked in the UK before moving, so she already has a National Insurance number. This exemption does not apply to her. A landlord who has never had a National Insurance number may be automatically exempt, even when their UK rent is above the income threshold. That landlord should not treat the exemption as unconditional if their circumstances later change.

An SA109 return can defer the 2026 start

HMRC has a separate, temporary exemption for the 2026 to 2027 tax year. If your 2024 to 2025 tax return included the SA109 residence pages, you are automatically exempt for 2026 to 2027. You do not need to contact HMRC or apply for that one-year exemption.

If your 2024 to 2025 return did not include SA109, the automatic exemption does not apply. You can apply if you reasonably expect to include SA109 in your 2025 to 2026 or 2026 to 2027 return. HMRC lists the situations covered by this route in the same SA109 exemption guidance.

This deferral is not an open-ended exemption. From the 2027 to 2028 tax year, you must use Making Tax Digital if your qualifying income for 2025 to 2026 was above £30,000, unless another exemption applies. If Elena included SA109 in her 2024 to 2025 return, her start is therefore deferred to 6 April 2027. Her £38,000 of qualifying income would then put her in scope, subject to her circumstances at that point.

Making Tax Digital and the landlord scheme do different jobs

The Non-resident Landlord Scheme (NRLS) is a tax-withholding system. GOV.UK treats you as a non-resident landlord for this scheme if you live abroad for at least six months a year. You can fall within that definition even if you remain UK resident for tax purposes, so do not use NRLS status as a shortcut for the Making Tax Digital residence rules.

Unless HMRC approves an NRL1i application to receive rent in full, a letting agent normally deducts basic-rate tax after taking account of expenses it has paid. If there is no agent, a tenant paying more than £100 a week may have to deduct the tax. The agent or tenant gives you a certificate after the tax year showing the amount deducted.

Suppose Elena’s certificate shows that her agent deducted £7,000. That amount is tax already paid, not a property expense. Her annual tax return reports the rental income, allowable expenses and tax deducted. HMRC then works out the final balance from her full tax position.

Approval to receive rent in full changes the withholding, but it does not remove the tax charge or create a Making Tax Digital exemption. Equally, an exemption from Making Tax Digital does not switch off the NRLS. The GOV.UK guidance for landlords who live abroad explains the deduction and Self Assessment process.

Prepare your records before choosing software

If you come into Making Tax Digital, the core record-keeping and quarterly-update duties are the same as for a UK landlord. Keep the agent’s rent statements, expense records and annual NRLS certificate. Record tax deducted under the NRLS separately from your property expenses.

Before choosing a product, confirm that it supports your UK property records and the residence information required for your annual return. If tax is deducted under the NRLS, ask how the product records that credit. You can review the options in the software comparison or use the software selector as a starting point.

If you need to check the wider timetable first, the main Making Tax Digital guide explains the thresholds and reporting cycle. A tax adviser can confirm how the residence rules, exemptions and NRLS apply to your own return.

Questions non-resident landlords commonly ask

I live abroad and have no National Insurance number. Am I exempt?

You are automatically exempt for a tax year if you do not have a National Insurance number before that year starts. The exemption continues unless your circumstances change. If you later receive a number, check your position again for the following tax year.

I have a National Insurance number from when I lived in the UK. What changes?

The automatic exemption for people without a National Insurance number does not apply. You may still have the SA109 exemption for 2026 to 2027 or another exemption. Otherwise, your qualifying income determines when you must start.

Does filing SA109 defer Making Tax Digital for every year?

The automatic SA109 exemption covers 2026 to 2027. Including the page in your 2024 to 2025 return does not by itself exempt you from 2027 to 2028 onwards.

Does overseas rental income count towards the UK threshold?

If you are not UK tax resident, foreign property income does not count. HMRC includes UK property income and self-employment income declared on your UK Self Assessment return. UK residents follow different rules, under which foreign property income can count.

Does NRL1i approval take me out of Making Tax Digital?

NRL1i approval changes the withholding of tax, not the Making Tax Digital rules. It lets you receive rent without tax deducted at source but does not change the income threshold or exemptions.