Big Changes Ahead: What UK Expats Need to Know About Making Tax Digital (MTD)

If you’re a U.S. expat living in the UK and earning income from self-employment or rental property, a major shift is coming your way. The UK’s Making Tax Digital (MTD) program is transforming how individuals report and pay income taxes. And if you’re not prepared, it could catch you off guard.

At Expatriate Tax Returns, we’re here to help you stay ahead of these changes with expert guidance and personalized tax support—so you can stay focused on your life abroad, not paperwork.

What Is Making Tax Digital?

Making Tax Digital for Income Tax Self-Assessment (MTD for ITSA) is HMRC’s move to modernize the UK tax system. Starting in April 2026, qualifying individuals will be required to:

  • Maintain digital records
  • Use approved MTD-compliant software
  • Submit quarterly income and expense updates
  • File year-end summaries in place of one annual Self Assessment return

This new system is mandatory and applies in addition to any U.S. tax obligations you may have.

Who Will Be Affected?

If you earn gross income from UK or overseas self-employment or rental property, you’ll likely fall under MTD rules based on your income level:

Gross IncomeMTD Start Date
Over £50,000April 2026
£30,000–£50,000April 2027
£20,000–£30,000April 2028 (expected)

Note: MTD currently excludes general partnerships—only individuals are affected for now.

What Will Change?

If you’re included, you’ll go from one annual tax return to a series of required filings:

  • Quarterly submissions of digital income and expenses
  • End of Period Statement (EOPS) at year-end
  • Final Declaration confirming your income and taxes due

Deadlines fall on the 7th of the month following each quarter:

  • Q1 (Apr 6 – Jul 5) → Due Aug 7
  • Q2 (Jul 6 – Oct 5) → Due Nov 7
  • Q3 (Oct 6 – Jan 5) → Due Feb 7
  • Q4 (Jan 6 – Apr 5) → Due May 7

And yes, this must be done using approved digital software—HMRC’s portal will not support these submissions.

What Happens If You Don’t Comply?

MTD comes with a points-based penalty system:

  • One point per missed submission
  • 4 points = £200 penalty
  • Additional penalties apply for late payments

Don’t risk unexpected fines, get organized now.

How to Prepare

Preparation is key. To avoid headaches later, we recommend:

  • Choosing MTD-compliant software
  • Adopting digital bookkeeping practices
  • Mapping out your quarterly schedule
  • Consulting an expert to ensure your setup works for both HMRC and IRS obligations

How Expatriate Tax Returns Can Help

With over a decade of experience helping U.S. expats, we’re fully prepared to guide you through the MTD transition, no matter where you are in the world.

• We’ll help determine if MTD applies to you
• Recommend easy-to-use, compliant software
• Create a tailored plan for your transition
• Ensure your UK and U.S. reporting stay aligned

You don’t have to navigate this alone—Diane Siriani and the team at Expatriate Tax Returns are here to simplify the process and eliminate tax stress, no matter how complex your expat situation may be.

Don’t Wait Until the Deadline

If you’re a self-employed expat or property owner in the UK, Making Tax Digital will likely affect you. Reach out now to get your plan in place.

Let’s make your MTD transition stress-free. We’re here to help you file with confidence—everywhere life takes you.

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