Foreign Property Income Under MTD

This page is for a UK landlord who already lets UK property and also owns a property, or properties, they rent out abroad — one flat in Spain, a holiday apartment in Portugal, a house let in France. It does not cover a landlord who is not UK resident; see section 3 for how MTD applies to non-residents.

If you are UK resident, foreign property income counts towards your qualifying income in exactly the way UK property does. HMRC's own example is a landlord who rents out a property in France alongside a UK letting: “both income sources will count towards your qualifying income.” So a UK-resident landlord above the relevant threshold is mandated from the same date as anyone else — having foreign property income does not, by itself, change that.

There is a genuine one-year exemption, but it does not turn on owning property abroad. HMRC's exemption guidance says you do not need to use Making Tax Digital for Income Tax for the 2026 to 2027 tax year only if your 2024-25 Self Assessment return claimed averaging relief, claimed qualifying care relief, or included the SA107 or SA109 supplementary pages — and the normal income threshold applies again from the 2027 to 2028 tax year based on your 2025-26 qualifying income. SA109 is about your residence status — non-resident, dual resident, split-year treatment and similar — not about owning property abroad, so foreign property income on its own does not qualify you.

If you are not UK resident, a different rule applies: you only need to follow the Making Tax Digital for Income Tax rules for your UK self-employment and property income if you're resident or domiciled outside the UK. Foreign property income you have not declared on a UK Self Assessment return does not count towards your qualifying income at all.

HMRC's update notice sets a minimum for what a foreign property quarterly update must contain: total rents and other receipts, any premiums for the grant of a lease, and allowable property expenses (rent, repairs, legal fees, cost of services provided). That is a shorter list than the UK property update, which itemises income and expenses in more detail.

HMRC's simpler categorisation option is not part of this. It is open to a landlord with total UK property turnover of less than £90,000, or to a sole trader, and HMRC says the turnover threshold does not apply to foreign property income at all. In MTDone, the business setting controls whether those expenses are kept itemised or filed as one consolidated figure, with no turnover restriction. See our three-line accounts guide for how the UK option works.

If tax has already been withheld or paid on your foreign rental income abroad, you are not simply taxed on it again in full. HMRC says you can usually claim Foreign Tax Credit Relief when you report your overseas income in your tax return. HS263 sets out the choice: you can choose between FTCR or deduction relief, depending on which is most beneficial. We do not calculate or compare the two for you on this page — which is better depends on your own figures and any double taxation agreement.

The relief has limits. HMRC warns that you may not get back the full amount of foreign tax you paid, because a DTA may restrict the amount of foreign tax payable, which will affect the amount of relief you can claim. And if you have more than one source of income or capital gains eligible for relief, a separate calculation needs to be performed for each item— so a separate calculation per foreign property, consistent with the separate loss computations in section 2.

If your foreign let used to qualify as a furnished holiday letting in the European Economic Area, that special tax regime ended on 6 April 2025. It is now an ordinary part of your foreign property business, and any brought-forward FHL losses become losses of that business. See our FHL tax changes guide for the detail.