Making Tax Digital for UK Expats: A Simple Guide to the 2026 Rules
Big changes are coming to the way you report and pay taxes in the UK. If you’re a self-employed expat or a landlord, you may soon need to switch to a fully digital, quarterly reporting system under HMRC’s Making Tax Digital (MTD) rules.
This guide walks you through what’s changing, who it applies to, and how to get ready, with confidence and clarity.
What Is Making Tax Digital (MTD)?
Making Tax Digital for Income Tax Self-Assessment (MTD for ITSA) is part of HMRC’s plan to modernize the UK tax system. Starting in April 2026, certain individuals will be required to:
- Keep digital records
- Use MTD-compliant software
- Submit income and expense updates every quarter
This replaces the current annual Self Assessment process and is designed to simplify and streamline tax reporting.
Who Will Be Affected?
The rollout is phased by income level:
| Total Gross Income (from self-employment and/or property) | MTD Start Date |
|---|---|
| Over £50,000 | April 2026 |
| £30,000 to £50,000 | April 2027 |
| (Expected) £20,000 to £30,000 | April 2028 |
If you earn income from self-employment, UK or overseas property, or a combination of both, MTD may apply to you.
General partnerships were originally scheduled to join MTD for ITSA, but HMRC has postponed their inclusion indefinitely. The current rollout applies only to individuals.
What Changes Under MTD?
If you fall under MTD, you’ll shift from one annual tax return to a series of smaller, more frequent submissions. You’ll:
- Keep digital records of income and allowable expenses
- Submit quarterly updates to HMRC (every 3 months)
- File an End of Period Statement (EOPS) at the end of the tax year
- Submit a Final Declaration, confirming your total income and tax due
Quarterly submissions are due by the 7th of the month following each period:
- Q1 (April 6 – July 5): Due August 7
- Q2 (July 6 – October 5): Due November 7
- Q3 (October 6 – January 5): Due February 7
- Q4 (January 6 – April 5): Due May 7
To file under MTD, you’ll need approved software—the HMRC portal won’t support these submissions.
What Counts Toward the Income Threshold?
HMRC will determine your MTD eligibility based on your total gross income from:
- UK or overseas self-employment
- UK or overseas rental properties
Other types of income, such as pensions or employment wages, do not count toward the threshold.
What If You Receive a Letter from HMRC?
After you submit your 2024–2025 Self Assessment return (due by January 31, 2026), HMRC will review your income. If you meet the threshold, they’ll notify you directly.
If you receive this letter, don’t panic—it’s just a heads-up that you’ll be enrolled in MTD for your next filing cycle. We’ll be here to guide you through each step.
Why It Pays to Prepare Early
Getting set up for MTD isn’t complicated—but it does take a bit of planning. You’ll want to:
- Choose the right software
- Set up digital bookkeeping practices
- Get familiar with the new quarterly schedule
By preparing now, you’ll avoid surprises down the road and stay in control of your reporting process.
What Are the Penalties for Non-Compliance?
HMRC is rolling out a points-based system for late submissions. Each missed quarterly update adds a point. Reach the limit (usually four points), and you’ll receive a £200 fine, with more penalties for additional missed deadlines.
There are also separate late payment penalties, which increase the longer a bill goes unpaid.
With a little organization upfront, you can easily stay ahead of deadlines and avoid penalties altogether.
Do I Need New Software?
Yes. You can’t use the HMRC portal for MTD submissions. You’ll need MTD-compliant software that lets you:
- Record your income and expenses digitally
- File quarterly updates, your EOPS, and Final Declaration
Greenback will be offering an affordable, MTD-compliant solution that works seamlessly with your expat tax needs.
How We Can Help
We’re already helping expats prepare for MTD—and we’re here for you too.
- Not sure if MTD applies to you? We’ll help you figure it out.
- Need help choosing software? We’ve got vetted tools and simple guidance.
- Want peace of mind? We’ll walk you through what to do and when.
If you’d like help building a personalized MTD transition plan, our team is ready to support you.
Don’t Wait Until the Deadline Is Looming
Making Tax Digital is coming—and the earlier you start, the easier your transition will be. Whether you need help figuring out if MTD applies to you or want hands-on support getting set up, we’re here to make it simple.
FAQs About MTD for Expats
Do I need to join MTD if I live outside the UK?
If your income from UK property or self-employment exceeds the threshold, yes. Residency doesn’t exempt you.
Does US income count toward the threshold?
Only if it’s from self-employment or property, investment income, pensions, or wages from employment do not count.
Can I opt out?
No. If your income meets the criteria, MTD is mandatory.
Can Greenback handle my MTD filings?
Yes. We’re building an integrated solution for both UK and US expat tax needs.
