Making Tax Digital for Expats in the UK: Everything You Need to Know
If you have moved to the UK from overseas and earn income from self-employment or property, Making Tax Digital (MTD) for Income Tax almost certainly applies to you - or will soon. This guide explains exactly what MTD is, who it affects, what you need to do, and what special rules apply to internationally mobile individuals living in the UK.
What is Making Tax Digital for Income Tax?
Making Tax Digital for Income Tax is a UK government initiative that replaces the traditional annual Self-Assessment tax return with a new system of digital record-keeping and quarterly reporting. Instead of filing once a year, you submit four quarterly updates to HMRC throughout the tax year, followed by a final year-end declaration.
MTD does not change how much tax you owe. It changes how and when you report your income and expenses to HMRC.
Does Making Tax Digital Apply to Expats Living in the UK?
Yes - if you are UK tax resident and earn self-employment or property income above the threshold, MTD applies to you in the same way it applies to any other UK taxpayer.
There is a common misconception that being from overseas provides some form of exemption. It does not, if you are UK resident. The key factors are:
Whether you are a UK tax resident (determined under the Statutory Residence Test)
Whether you have qualifying income - that is, gross income (ie. Turnover) from self-employment, UK property, or both
Whether that qualifying income exceeds the relevant threshold
If all three apply, MTD applies to you. An easy way to check is GOV.UK’s free MTD Checker.
What Are the MTD Income Thresholds?
MTD is being introduced in phases based on income level:
From 6 April 2026: Qualifying income over £50,000
From 6 April 2027: Qualifying income over £30,000
From 6 April 2028: Qualifying income over £20,000
Qualifying income includes gross self-employment income and gross property income. Employment income, pensions, and investment income do not count towards the MTD threshold.
I Am on a Visa - Does MTD Still Apply to Me?
Yes, if you are UK tax resident and above the income threshold, your visa status does not affect your MTD obligations.
Whether you are in the UK on a Skilled Worker visa, an Ancestry visa, a Global Talent visa, or any other route, the question HMRC asks is whether you are tax resident in the UK - not whether you hold a UK passport. If you are resident here and have qualifying income above the threshold, you are within MTD.
What If I Have Foreign Income as Well as UK Income?
This is one of the most important questions for expats in the UK, and the answer depends on your UK tax residency status and how your income is structured.
If you are a UK resident, you are generally taxable in the UK on your worldwide income. Your qualifying income for MTD purposes includes both your UK and overseas self-employment and property income (as a UK resident, overseas property is included in your MTD reporting).
If you claim the remittance basis (FIG regime from April 2025) of taxation (available to some non-domiciled individuals), your overseas income that is not remitted to the UK may be outside the scope of UK tax — but this is a complex area and the interaction with MTD requires careful consideration, especially if you have included pages SA109 in your previous tax return.
If you have recently arrived in the UK and are in a split year (part of the year overseas, part UK resident), your MTD obligations depend on your circumstances during the UK resident portion of the year.
In all of these cases, taking specialist advice before assuming your position is straightforward is recommended.
What Is SA109 and Why Does It Matter for MTD?
The SA109 is a supplementary page on the UK Self-Assessment tax return used to report residence and domicile information. You would file an SA109 if you are:
Non-UK resident (but have UK income to declare)
Claiming split-year treatment (arriving or leaving the UK mid-year)
Claiming the remittance basis (FIG regime for 2025/26 tax year)
Claiming overseas workday relief
Newly UK resident
Why does this matter for MTD? HMRC has confirmed that all taxpayers who completed an SA109 as part of their 2024/25 Self-Assessment return are automatically deferred from MTD until April 2027 at the earliest.
If you did not file an SA109 for 2024/25 but reasonably expect your 2025/26 or 2026/27 return to include one, you can apply to HMRC for this deferral - but it is not automatic in that case and must be applied for proactively.
What If I Do Not Have a UK National Insurance Number?
If you do not have a UK National Insurance number, you are automatically exempt from MTD for that tax year.
This exemption applies to individuals who have not yet been issued a National Insurance number before the start of the relevant tax year. For example, if you receive a National Insurance number on 20 April 2026 and your qualifying income is over £50,000 for the 2024 to 2024/25 tax year, you will be exempt from using Making Tax Digital for Income Tax for the 2026/27 tax year.
However, most people who have been in the UK for some time and are employed, self-employed, or claiming benefits will already have one, so this exemption applies to a relatively narrow group.
Need Help? Managing tax obligations across two countries is rarely straightforward. At AUK Tax, we specialise in helping individuals with UK and Australian tax matters - whether that's filing your UK Self Assessment return, Australian Income Tax Return, applying for non-resident landlord status, or making sense of how the two systems interact for your specific situation.
How Does MTD Work in Practice?
Once you are within MTD, here is what the reporting cycle looks like:
Step 1 — Keep digital records. You must maintain digital records of your income and expenses using HMRC-compatible software. Spreadsheets alone are not sufficient unless linked to approved bridging software.
Step 2 — Submit quarterly updates. Every three months, you submit a summary of your income and expenses to HMRC. The four quarterly deadlines for 2026/27 tax year fall on the 7th day of August, November, February, and May.
Step 3 — Submit a final declaration. After the end of the tax year, you finalise your tax position, make any necessary adjustments, and submit a final declaration to HMRC. This replaces the traditional Self-Assessment tax return. As with the Self-Assessment submission deadline, the final declaration is due by 31 January following the end of the tax year.
What Happens If I Do Not Comply with MTD?
HMRC is introducing a points-based penalty system for MTD. Each missed quarterly submission adds a penalty point. Once you reach the threshold (typically four points), HMRC issues a £200 financial penalty. Further missed submissions generate additional £200 penalties.
During the 2026/27 tax year, HMRC has indicated it will not charge penalties for late quarterly submissions - but you are still required to keep digital records and submit before your final declaration. Treating the first year as a grace period without making any effort to comply is not advisable.
What About the Remittance Basis and the New FIG Regime?
From April 2025, HMRC replaced the remittance basis with the new Foreign Income and Gains (FIG) regime. Under the FIG regime, eligible individuals - broadly those in their first four years of UK tax residence after a period of non-residence - can elect to exclude qualifying foreign income and gains from UK tax entirely for those years.
It is important to understand that FIG regime income may still count towards the MTD qualifying income threshold, even if it is not subject to UK tax in the usual way. This is an evolving area and specialist advice is essential if you are within the FIG regime and approaching the MTD thresholds.
What Software Do I Need for MTD?
HMRC requires the use of compatible software to keep digital records and submit quarterly updates. There are a range of approved options available, including dedicated accounting software and apps designed for landlords and sole traders. You cannot submit MTD updates directly through the HMRC website.
If you work with a tax agent - such as AUK Tax - we can submit on your behalf using agent-compatible software and manage the entire reporting process for you.
AUK Tax Can Help You Prepare for MTD
Making Tax Digital adds a new layer of complexity for expats in the UK, particularly those with overseas income, complex residency histories, or non-domicile status. Getting your position assessed early - before the relevant threshold applies to you, is the most effective way to avoid unnecessary penalties.
AUK Tax specialises in UK and Australian personal tax for internationally mobile individuals. We help expats in the UK:
Confirm whether and when MTD applies to their situation
Assess the impact of the SA109 deferral or FIG regime on their MTD obligations
Set-up compliant software and digital record-keeping processes
Maintain compliant software and digital record-keeping
Prepare and submit quarterly updates and the year-end final declaration
Coordinate UK reporting obligations with any overseas tax requirements
Book a free MTD assessment call today
This article is intended as general guidance only and does not constitute tax advice. Individual circumstances vary and the rules around MTD, non-domicile status, and overseas income are complex. Please contact AUK Tax for advice tailored to your situation.
AUK Tax — UK and Australian personal tax specialists. Offices in London and Sydney.