Are you in? It’s your rent, not your profit
Add up the rent tenants or guests paid for your overseas property in the 2025/26 tax year, converted into pounds – your share only if you own jointly – before local agent fees, foreign tax or repairs. Add any UK rent and self-employed takings. If the total is over £30,000, MTD applies from 6 April 2027; over £50,000 and you’ve been in since April 2026.
Over £50,000
Over £30,000
Over £20,000
planned
Your work in accountant language
What actually happens in your working life, what your accountant and HMRC call it, and what to do about it.
| What happens | Accountant calls it | What you do |
|---|---|---|
| Your tenant in Spain pays €1,200 a month | Overseas property income (gross, in pounds) | Convert each payment to pounds and record it. Use a consistent rate – the rate on the day, or HMRC’s published average rates. |
| The local agent pays you net after its fee | Gross rent + an expense (agent fees) | Record the full rent and the agent’s fee separately, both converted to pounds. |
| You pay local property tax or community fees | Allowable expense (local property costs) | Keep the bills; convert to pounds. |
| You pay income tax on the rent in the other country | Foreign tax paid – Foreign Tax Credit Relief | Not an expense. Keep the foreign tax return and receipts; the credit is claimed in your final declaration. |
| You fly out to deal with a repair | Travel – allowable only if wholly for the let | Claim only trips mainly for the property, not combined holidays. |
| Your mortgage on the property is paid | Finance costs – 20% tax credit, not an expense | Record the interest separately, converted to pounds. |
| You transfer rent from your foreign account to the UK | Moving your own money – not income or an expense | The rent was already recorded when the tenant paid. |
| Every three months | Quarterly update | Your software sends HMRC your overseas property totals, separately from any UK property. |
| After 5 April | Final declaration | Confirm figures and claim Foreign Tax Credit Relief; tax is due by 31 January. |
What can you claim?
✓ Usually allowable
- Local letting agent and management fees
- Repairs and maintenance
- Community or service charges
- Local property taxes on the let property
- Insurance for the property
- Utilities and bills you pay as landlord
- Accountancy fees for the UK and local returns relating to the let
- Replacing furniture and appliances like-for-like
- Travel that is wholly for the property
✗ Not allowable
- Foreign income tax on the rent (it’s a credit, not an expense)
- Mortgage interest as an expense on residential lets (20% credit instead)
- Costs for weeks you use the property yourself
- The cost of buying or improving the property
- Trips that are mainly holidays
Rules that matter for uk residents with overseas property
Overseas property is a separate business
HMRC treats all your overseas lettings as one overseas property business, separate from any UK lettings. They’re reported separately in your quarterly updates, and a loss abroad can’t be set against UK rental profits – it can be carried forward against future overseas property profits.
Foreign Tax Credit Relief
If you pay tax on the rent in the country where the property is, you can usually claim credit for it against the UK tax on the same income, up to the amount of UK tax due. The rules depend on the tax treaty with that country. You can’t also deduct the foreign tax as an expense.
Converting currency
Everything goes into your records in pounds. You can use the exchange rate on the date of each transaction or HMRC’s published average rates – the key is to be consistent and keep a note of the method you used.
Mortgage interest still restricted
For residential property abroad, finance costs get the same 20% tax credit as UK lets rather than being deducted. The former EEA furnished holiday let rules were abolished from April 2025 along with the UK ones.
Worked example
Ana lives in Reading and lets a flat in Lisbon and a holiday apartment in the Algarve – figures in pounds; mortgage interest is handled as a 20% tax credit, not an expense (illustrative example)
| Rent received | £34,500 |
| less Local agent and management fees | −£4,800 |
| less Condominium (community) fees | −£1,900 |
| less Local property tax (IMI) | −£900 |
| less Repairs and maintenance | −£1,600 |
| less Utilities and insurance | −£2,300 |
| less Accountancy (UK and Portugal) | −£1,200 |
| Profit | £21,800 |
| Income tax (estimate) | £1,846 |
| Total tax for the year | £1,846 |
| Put aside each month | £154 |
Estimate for 2026/27 using England, Wales & NI rates, assuming no other income and before any 20% mortgage interest credit. Scotland has different income tax bands.
What a quarterly update looks like
A typical quarter for an overseas landlord: download the local agent’s statements, convert rent and costs into pounds using your chosen rate, add bills and repairs, and note any mortgage interest and foreign tax paid – then submit, with overseas figures kept apart from any UK lettings.
| Quarter | Period | Submit by |
|---|---|---|
| Q1 | 6 Apr – 5 Jul | 7 Aug |
| Q2 | 6 Jul – 5 Oct | 7 Nov |
| Q3 | 6 Oct – 5 Jan | 7 Feb |
| Q4 | 6 Jan – 5 Apr | 7 May |
| Final declaration | The whole tax year | 31 Jan following |
Quarterly updates are summaries – they don’t change when you pay. Tax is still due by 31 January (plus payments on account on 31 January and 31 July if they apply to you).
What will an accountant cost?
Typical monthly fees under MTD for Income Tax for: Overseas property.
| Option | What you get | Per month |
|---|---|---|
| You do it yourself | MTD-compatible software. You keep the records and send the updates. | £0–£15up to £180 a year |
| Accountant files for you | You keep records in an app; they check them, send the 4 quarterly updates and the final declaration. | £50–£90about £600–£1,080 a year |
| Full service | They do the bookkeeping too – you share receipts and bank feeds, they handle the rest. | £80–£150about £960–£1,800 a year |
What pushes the price up: foreign tax credit claims and rent in another currency; records kept on paper rather than in an app; being VAT-registered; catching up on missed updates or late returns.
What a fixed-fee quote should include
- All 4 quarterly updates and the final declaration (your tax return)
- The MTD software licence – or whether you pay for it separately
- Whether they do the bookkeeping or only check what you’ve recorded
- A reminder before each deadline and an estimate of the tax to put aside
- Whether VAT (20%) is added on top – not every practice charges it
Accountancy fees for your lettings are an allowable expense, so they reduce your tax bill.
Indicative ranges from published UK price lists, checked October 2026. Not a quote – your fee depends on how many transactions you have, how tidy your records are and where you live.
Questions uk residents with overseas property ask
I pay tax in Spain on the rent. Do I still pay UK tax?
You still declare it in the UK. You can usually claim credit for the Spanish tax against the UK tax on the same income, so you’re not taxed twice in full.
Does overseas rent count towards the MTD threshold?
Yes. Gross overseas property income is added to UK property and self-employment income to work out whether you’re in.
Which exchange rate should I use?
Either the rate on the day or HMRC’s published average rates. Pick one method and use it consistently.
Can a loss on my overseas flat reduce tax on my UK rentals?
No. Overseas and UK property are separate businesses. An overseas loss is carried forward against future overseas property profits.
Sources
- Find out if and when you need to use Making Tax Digital for Income Tax – GOV.UK
- Work out your qualifying income for Making Tax Digital for Income Tax – GOV.UK
- Send quarterly updates using Making Tax Digital for Income Tax – GOV.UK
- Find software that works with Making Tax Digital for Income Tax – GOV.UK
- Penalties for Making Tax Digital for Income Tax – GOV.UK
This guide is general information about HMRC’s Making Tax Digital rules as of 26 October 2026, not tax advice. MTD Match is an independent introduction service and is not affiliated with HMRC. Check gov.uk or speak to an accountant about your own situation.