Non-resident landlords and MTD: a one-year deferral

If you live abroad and let property in the UK, you've probably had the same nagging worry as every other landlord this year: do I need to start filing quarterly under Making Tax Digital from April 2026?

For many non-resident landlords, the answer is reassuring. HMRC has built in an automatic one-year deferral. If you reported your residence position on the SA109 pages of your 2024/25 Self Assessment return, you do not need to use Making Tax Digital for Income Tax for the 2026/27 tax year at all.

That's not a loophole and it's not something you have to argue for. It's a published HMRC easement, and for a lot of expat landlords it applies automatically. Below we'll explain exactly who qualifies, who has to apply rather than getting it for free, what happens at the end of the deferral, and the things the deferral does not change (your withholding under the Non-resident Landlord Scheme keeps running as normal).

This guide is for individuals who are non-UK resident or who claim a special residence basis, and who let UK or overseas property. It reflects the rules as published by HMRC for 2026/27.

What is the non-resident landlord MTD deferral?

If your 2024/25 Self Assessment return included the SA109 residence pages, you're automatically not required to use Making Tax Digital for Income Tax in 2026/27. You join from 2027/28 at the earliest, and only if your qualifying income is over the relevant threshold.

That single paragraph is the heart of it, but the detail matters, so let's unpack it.

Making Tax Digital for Income Tax (MTD for IT) is HMRC's new way of reporting self-employment and property income. Instead of one annual Self Assessment return, you keep digital records, send quarterly updates through compatible software, and submit a final declaration after the tax year ends.

Mandation is being phased in by income level:

Source: HMRC, "Find out if and when you need to use Making Tax Digital for Income Tax."

So a landlord with gross rents over £50,000 would normally be swept into MTD from 6 April 2026. The deferral changes that timing for people whose tax affairs involve residence or remittance reporting, because the software needed to handle those situations isn't ready yet.

Why does the deferral exist?

MTD compatible software has to be able to file everything a taxpayer needs to file. The residence and remittance information that goes on the SA109 page, the kind of thing non-resident landlords, dual residents and remittance-basis users report, can't yet be submitted through MTD for IT.

Rather than force those taxpayers into a system that can't accommodate them, HMRC has deferred them. It's a practical fix, not a reward, and it buys an extra year for the software and HMRC's systems to catch up.

The same deferral also applies to a few other supplementary pages that the software can't yet handle, but the one that matters for expat and overseas landlords is SA109.

Who gets the deferral automatically?

You get the deferral automatically, with nothing to apply for, if your 2024/25 Self Assessment return included the SA109 supplementary page (residence, remittance basis and foreign income and gains).

In HMRC's words on the exemption guidance, you do not need to use Making Tax Digital for Income Tax for the 2026/27 tax year if your 2024/25 tax return included the SA109 supplementary page. The exemption applies automatically.

In plain terms, if you ticked the residence box and filed those pages for the year ended 5 April 2025, HMRC already has the information it needs to leave you out of MTD for 2026/27. You don't write in, you don't call, you simply carry on filing your annual Self Assessment return for 2026/27 in the normal way.

Illustrative example

Daniel moved to Dubai in 2022 and rents out two flats in Manchester. His gross UK rents are around £62,000 a year, comfortably over the £50,000 phase 1 figure. Because he filed SA109 residence pages with his 2024/25 return, he is automatically outside MTD for IT for 2026/27. He files a normal Self Assessment return for 2026/27, and only looks at MTD for 2027/28 onwards.

Who has to apply for the deferral instead?

Not everyone filed SA109 for 2024/25. Maybe you only became non-resident partway through, or your circumstances changed. HMRC covers that too, but here you do have to ask.

You'll need to apply for an exemption if your 2024/25 return did not include the SA109 page, but you reasonably expect your 2025/26 or 2026/27 return to include it.

So the test is forward-looking. If you can sensibly say "I wasn't reporting residence for 2024/25, but I will be for 2025/26 or 2026/27," you can apply for the same one-year deferral. It isn't automatic, and you or your agent should make the application to HMRC in good time before the start of the 2026/27 tax year so it's in place before any MTD obligation would otherwise bite.

Illustrative example

Sofia left the UK in May 2025 and let her London flat after she moved. Her 2024/25 return did not include SA109, because she was UK resident for the whole of that year. She reasonably expects her 2025/26 return to include the residence pages. Because the automatic deferral keys off the 2024/25 return, Sofia's deferral is not automatic, so she (or her accountant) applies to HMRC for the exemption ahead of April 2026.

What does the deferral not change?

This is where non-resident landlords most often trip up, so read this section twice.

Your Non-resident Landlord Scheme withholding carries on

The Non-resident Landlord Scheme (NRLS) is completely separate from MTD, and the deferral does not touch it.

Under the NRLS, your UK letting agent (or your tenant, where there's no agent and the rent is over £100 a week) must deduct Income Tax at the basic rate of 20% from your net rental income before paying it over to you, unless HMRC has told them in writing that you can be paid gross. Source: HMRC, "Tax on your UK income if you live abroad" and the NRLS guidance.

If you've already been approved to receive rent without tax deducted, usually after submitting form NRL1 to HMRC, that approval stands. The MTD deferral changes nothing about it. You don't suddenly start having tax withheld again, and equally you don't get to stop withholding just because you're outside MTD for a year.

The deferral is purely about how and when you report and file. The mechanics of getting your rent paid, gross or net, are untouched.

You still have to file and pay on time

Being deferred from MTD does not mean you're off the hook for Self Assessment. You still file an annual return and pay your tax by the usual deadlines: the online filing deadline is midnight on 31 January after the tax year ends, and your balancing payment is due the same day, with payments on account on 31 January and 31 July where they apply. Source: HMRC Self Assessment deadlines.

The deferral simply keeps you on the familiar once-a-year return for an extra year, rather than moving you to quarterly updates.

Your foreign property is still a separate business

If you let property both in the UK and overseas, MTD treats them as two different businesses, and that distinction survives the deferral.

HMRC's guidance is explicit: all of your UK properties are legally treated as one "UK property business," and all of your foreign properties are legally treated as one "foreign property business." When MTD does eventually apply to you, you keep separate digital records for each and report them separately. It's worth getting your bookkeeping split cleanly along that line now, so you're ready.

What happens when the deferral ends?

The deferral is one year. It ends with the 2026/27 tax year, and your MTD obligation is then tested for 2027/28.

You'll need to use MTD for IT from the 2027/28 tax year onwards if your qualifying income is above £30,000 for the 2025/26 tax year, in line with phase 2 of the rollout. Source: HMRC exemption guidance and the eligibility guidance.

A couple of points that catch people out here:

• Qualifying income is gross, and it adds up. It's your total income before expenses from self-employment plus property, combined. Employment and pension income don't count toward the threshold, though they're still reported at the final declaration stage. So a landlord with £33,000 of gross rents is over the £30,000 line even if the profit after costs is far lower.
• The threshold is tested on a past year. Whether you're in for 2027/28 is decided by your 2025/26 figures, not your 2027/28 ones.

If, when the deferral lifts, the software still can't handle your residence reporting, keep an eye on HMRC's guidance, as the position for SA109 filers may be reviewed again. We monitor this for our landlord clients and will flag any change.

What MTD will actually involve once it applies

When you do come into MTD for IT, the shape of it is:

• Digital records. You keep your income and expenses digitally, in compatible software. If you use spreadsheets, you'll need bridging software, and you can't simply copy and paste figures between programs. Digital links are required.
• Quarterly updates. Four updates a year. Crucially, these are cumulative year-to-date summaries, not four mini tax returns, and your software works the totals out for you to check.
• Final declaration. This replaces the Self Assessment return. It's where you bring in everything else and claim your reliefs and allowances, due by 31 January after the tax year ends.

The standard quarterly periods and deadlines are below.

Source: HMRC, "Use Making Tax Digital for Income Tax."

Late submission is dealt with through a points-based system: you get one point per missed deadline, and once you reach four points you face a £200 penalty, with a further £200 each time you miss a deadline after that. Late payment carries separate penalties and interest. Source: HMRC, "Penalties for Making Tax Digital for Income Tax."

A simple decision walkthrough

Use this to work out where you stand. It's a starting point, not formal advice on your specific position.

1. Did your 2024/25 Self Assessment return include the SA109 residence pages?

• Yes → you're automatically deferred. No MTD for IT in 2026/27. Carry on with your annual return.
• No → go to step 2.

1. Do you reasonably expect your 2025/26 or 2026/27 return to include SA109?

• Yes → you can apply to HMRC for the deferral. Do it before April 2026; it isn't automatic.
• No → the deferral doesn't apply, and your MTD timing follows the normal income thresholds.

1. Either way: keep your NRLS withholding arrangement exactly as it is, keep UK and foreign property records separate, and re-check your position for 2027/28 against your 2025/26 income.

Working out residence and the SA109 position is genuinely fiddly, and getting it wrong changes your whole filing timeline. If you're not certain whether the deferral applies to you, our tax advisory team can confirm your status and handle the application if you need one. We work with landlords across the UK and overseas, and we'll make sure you're filing the right way at the right time.

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