Making Tax Digital for non-resident landlords
Non-UK residents who own rental property in the UK have been given considerably more comfort under Making Tax Digital for Income Tax (“MTD IT”) than is generally appreciated. A short-term deferral covers most non-residents for 2026/27, and a second, indefinite exemption in the final regulations keeps a large proportion of the population outside MTD IT altogether, quite possibly permanently.
The position is, however, technical, and the two exemptions operate on quite different bases. This article sets out both, identifies the group who remain genuinely exposed from April 2027 onwards, and includes two worked examples to illustrate how the rules apply in practice.
MTD IT in brief
From 6 April 2026, MTD IT requires individuals whose gross qualifying income from self-employment and property exceeds a threshold to keep digital records and submit quarterly updates to HMRC through MTD-compatible software.
The phased thresholds are:
– From 6 April 2026: qualifying income over £50,000 (based on the 2024/25 return)
– From 6 April 2027: qualifying income over £30,000 (based on 2025/26)
– From 6 April 2028: qualifying income of £20,000 or more
For non-UK residents, qualifying income includes only UK-source gross rents and UK self-employment turnover. Rental income from property situated outside the UK does not enter the calculation.
Two layers of protection: the legislative framework
The Income Tax (Digital Obligations) Regulations 2026 (SI 2026/336) were laid on 24 March 2026 and came into force on 1 April 2026. They provide, in effect, two separate exemption routes that are capable of applying to non-resident landlords. The two routes operate independently: either one is enough to take the taxpayer outside MTD IT, and many non-residents benefit from both.
Layer 1 – the temporary exemption
Regulation 43, sitting in Chapter 6 of Part 7 (“Temporary exemptions for the tax year 2026-27”), provides a temporary exemption for 2026/27 only for taxpayers whose circumstances involve non-residence or residence/domicile related claims. In practice, HMRC has confirmed that this exemption covers anyone who filed the SA109 (residence, remittance basis etc.) supplementary pages in their 2024/25 tax return. This exemption applies automatically, without any application being required.
The scope of the exemption was initially drafted more narrowly, but following representations from the CIOT, ATT and other professional bodies, HMRC confirmed in early 2026 that the wider interpretation applies: if SA109 pages appeared in your 2024/25 return for any reason, you are deferred to April 2027.
Those who did not file SA109 in 2024/25 but who reasonably expect to do so in 2025/26 or 2026/27: for example, a recent leaver whose year of departure falls in 2025/26, can apply to HMRC for the equivalent exemption.
The important limitation is that Regulation 43 covers 2026/27 only. What happens from April 2027 depends on whether a second exemption is available.
Layer 2 – the NINO exemption
Regulation 35, sitting in Chapter 4, Section 2 of Part 7, provides a standalone and indefinite exemption for individuals who do not hold a UK National Insurance number. The operative wording is short and unambiguous:
“A digital obligation does not apply to a relevant person in relation to a digital obligation tax year (“the tax year Y”) where, on the last day (5th April) of the tax year Y-1, the person is an individual without a national insurance number.”
Four points are worth drawing out.
First, the test is a simple factual one applied on a single date. If the individual does not hold a UK NINO on 5 April of the preceding tax year, no digital obligation arises for the tax year that follows. No application is required and no HMRC discretion is involved.
Second, the exemption is applied fresh each tax year. A non-resident landlord who will not hold a UK NINO is therefore outside MTD IT indefinitely, assessed year by year under the same rule. If the individual later obtains a NINO: for example, on becoming UK resident or working under a UK payroll, the exemption ceases to apply from the tax year beginning on the following 6 April.
Third, the exemption applies regardless of income level. A non-resident landlord with £200,000 of gross UK rents who does not hold a NINO is just as exempt as one with £20,000 of rents.
Fourth, this is a significant improvement on the draft regulations. The consultation draft had folded the NINO point into a wider identity-verification regime, which the ATT’s September 2025 response criticised as creating “much less clear” application of the exemption. The final regulations address that concern by pulling the NINO exemption back out and giving it its own standalone provision.
Who is genuinely exposed from April 2027 onwards?
Putting the two layers together, the group of non-resident landlords who are genuinely exposed to MTD IT from April 2027 is narrower than the headline rules would suggest. To fall into MTD IT a non-resident landlord must:
1. Hold a UK NINO on 5 April of the preceding tax year (taking them outside Regulation 35); and
2. Have more than £30,000 of gross UK-source qualifying income in 2025/26 (or £20,000 from 2027/28 onwards)
In practice this captures a specific population: former UK residents who have built up a UK rental portfolio, obtained a NINO while working in the UK, and subsequently emigrated. The typical case is a British expatriate or a dual citizen who has moved abroad but retains UK buy-to-let property. It does not capture overseas investors who have never lived or worked in the UK and therefore never obtained a NINO.
Two worked examples
Example 1: Catherine, a US citizen landlord who has never held a NINO
Catherine is a US citizen living in New York. She inherited a flat in London from a relative in 2015 and has rented it out ever since through a UK letting agent. Her gross UK rents are approximately £42,000 per year. She files a UK Self Assessment return each year, including the SA109 pages, and has a UTR but has never worked in the UK and has never been issued a NINO.
Catherine’s position:
– 2026/27: Regulation 43 exemption applies automatically (SA109 filed in 2024/25). Regulation 35 also applies (no NINO on 5 April 2026). Either exemption alone would be sufficient, both in fact apply. No MTD obligations.
– 2027/28 and subsequent years: The Regulation 43 deferral expires, but Regulation 35 continues to apply on a year-by-year basis. Each 5 April, the test is re-run: she still holds no NINO, so the exemption applies for the following year. Catherine remains outside MTD IT for as long as this exemption remains in its current form, unless and until she obtains a NINO.
She continues to file annual Self Assessment returns including SA109 in the usual way, with no quarterly digital reporting obligations.
Regulation 35 looks more like a drafting accommodation for the current MTD infrastructure than a deliberate policy choice, and HMRC may well revisit the position once a registration route for non-NINO taxpayers is in place. For the time being, however, Catherine’s position is straightforward.
Example 2: James, a British dual citizen with a UK NINO
James is a British/Canadian dual citizen. He worked in London in his twenties and holds a UK NINO. He moved to Toronto in 2018 and has rented out his former Islington flat ever since. His gross UK rents are £38,000 per year. He files a UK Self Assessment return each year including SA109.
James’s position:
– 2026/27: Regulation 43 applies automatically (SA109 filed in 2024/25). Regulation 35 does not apply because he holds a NINO. No MTD obligations for 2026/27 by virtue of the Regulation 43 deferral.
– 2027/28: Regulation 43 has expired. Regulation 35 does not apply. His 2025/26 gross UK qualifying income exceeds £30,000, so MTD IT applies from 6 April 2027. James will need to keep digital records of his UK property business and submit quarterly updates through MTD-compatible software.
James is precisely the type of taxpayer for whom the 2027 review point matters. The 2026/27 deferral buys him a year, but it does not solve the underlying exposure.
What non-resident landlords should be doing now
1. Check whether you hold a UK NINO. If you do not, Regulation 35 provides an indefinite exemption and the position is straightforward: no action required in relation to MTD IT, though annual Self Assessment obligations continue as normal.
2. If you do hold a UK NINO, confirm whether SA109 was filed in your 2024/25 return. If yes, Regulation 43 defers you to April 2027 automatically. If not, consider whether an application for the Regulation 43 exemption is appropriate based on your 2025/26 or 2026/27 position.
3. Calculate your 2025/26 gross UK rental income. This is the figure that determines whether MTD IT applies from 6 April 2027 if you hold a NINO and are no longer protected by Regulation 43.
4. Consider your record-keeping now. For those within scope from April 2027, moving to digital record-keeping for UK rental income will need to happen well ahead of the start date.
5. Review the interaction with the Non-Resident Landlord Scheme. The NRLS continues to apply in parallel with MTD IT and the two regimes need to be considered together.
If you would like to discuss your position
For non-resident landlords, the immediate message is more reassuring than the general MTD commentary suggests: if SA109 was on your 2024/25 return, you have nothing to do for 2026/27, and if you do not hold a UK NINO, Regulation 35 keeps you outside MTD IT indefinitely on current rules. The more important conversation is about 2027 and beyond for the narrower group who hold a NINO and whose UK rental income exceeds the threshold.
RJD Tax Advice specialises in personal tax for internationally mobile individuals, including non-resident landlords and those whose residence position is changing. If you would like to discuss how MTD IT will affect you, I am happy to have an initial conversation. Contact us
*This article reflects the position as at April 2026 based on The Income Tax (Digital Obligations) Regulations 2026 (SI 2026/336) and HMRC guidance. It is provided for general information only and does not constitute tax advice.*
