MTD ITSA for overseas property: What accountants need to know

Team Nomi

Aug 24, 2026
6 minutes read

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Making Tax Digital for Income Tax (MTD ITSA) changes how property income is reported to HMRC. For clients with overseas property, accountants need to understand how this income fits into the quarterly and year-end process.

Quarterly updates report business income and expenses, but they are not the final tax return. At year-end, the figures are reviewed and adjusted before the final declaration is submitted. Overseas property is treated as a separate business source, so it needs to be reviewed separately during this process.

What does MTD ITSA mean for overseas property income?

MTD ITSA splits the reporting process into quarterly updates and a year-end process.

During the tax year, quarterly updates give HMRC a summary of the business income and expenses. At the end of the year, the figures for each qualifying business are reviewed and adjusted before the taxpayer’s full tax position is finalised.

For accountants with clients who earn income from overseas property, this means overseas property should not simply be added as an extra figure at the end of the process. It is treated as a separate business source and needs to be reviewed as part of the MTD ITSA year-end process.

The guidance identifies three examples of separate qualifying business sources:

• • Sole Trade
  • UK Property Business
  • Overseas Property

If a taxpayer has more than one qualifying business, the year-end adjustments must be completed for each business source before moving on to the Final Declaration.

Quarterly updates are not the final tax return

One important point for accountants to explain to clients is that four quarterly updates do not complete the MTD ITSA process.

Quarterly updates give HMRC a summary of the business income and expenses during the year. They do not show the taxpayer’s full tax position and do not include the final legal declaration required at the end of the year.

For an overseas property business, accountants should make sure the quarterly information is complete and that the bookkeeping records support the figures reported to HMRC.

Once the fourth quarterly update has been submitted, the year-end process begins, including reviewing the figures and making any necessary adjustments.

Year-end adjustments for overseas property

Year-end adjustments are an important part of the MTD ITSA process. After the fourth quarterly update:

1. HMRC compiles the quarterly figures for each qualifying business.
2. Accountants review the figures and make any necessary year-end accounting or tax adjustments.
3. The adjusted figures are then used when completing the Final Declaration.

For overseas property income, accountants should review the figures carefully rather than assume that the quarterly totals are the final taxable figures.

Common year-end adjustments may include:

• • Capital allowances
  • Disallowable business expenses
  • Private use adjustments
  • Accounting accruals and prepayments
  • Stock adjustments
  • Depreciation adjustments
  • Other tax-specific adjustments required by HMRC

Not every adjustment will apply to every overseas property business. The key point is that quarterly figures may need to be reviewed and adjusted at year end before they form part of the taxpayer’s final tax position.

How does overseas property fit into the Final Declaration?

The Final Declaration brings together the taxpayer’s complete tax position for the year.

For a client with overseas property, this includes:

• • Sole trade income
  • UK property income
  • Overseas property income

But the Final Declaration covers more than property and business income. It also includes other taxable income and any relevant claims and reliefs.

This may include:

• • Employment income
  • Pension income
  • Savings interest
  • Dividends
  • Capital gains, where applicable
  • Foreign income
  • Other taxable income

Accountants also need to consider relevant claims and reliefs, such as

• • Pension contributions
  • Gift Aid
  • Personal allowances
  • Other allowable claims

The key point is that overseas property income is only one part of the taxpayer’s overall tax position. The Final Declaration brings all relevant income, adjustments, claims and reliefs together to finalise the taxpayer’s position for the year.

Overseas property income is not the same as all other foreign income

Accountants should distinguish between overseas property income as a business source and other types of foreign or investment income.

Overseas property is treated as a separate qualifying business source and requires its own year-end review. Other foreign income can be included separately in the Final Declaration if it was not reported through the quarterly business updates.

This distinction is important when preparing the client’s final tax position. Overseas property figures should be reviewed under the relevant business source, while other taxable foreign income should be considered separately as part of the Final Declaration.

What should accountants review before finalising an overseas property business?

1. Quarterly updates: Ensure all quarterly updates are submitted and accepted by HMRC.
2. Property records: Reconcile and check the overseas property bookkeeping records.
3. Year-end adjustments: Review and make any required accounting or tax adjustments.
4. Other income: Check all other taxable income, such as employment, pensions, interest and dividends.
5. Reliefs and allowances: Review personal allowances, pension contributions, Gift Aid and other claims.
6. All business sources: Make sure every qualifying business has been included and reviewed.

What is the deadline for the Final Declaration?

The supplied guidance states that the statutory deadline for the Final Declaration remains 31 January following the end of the tax year.

The Final Declaration cannot normally be submitted until all required quarterly updates have been completed for every qualifying business.

How MTD ITSA changes the accountant’s workflow

For clients with overseas property, MTD ITSA creates a more structured reporting process:

Quarterly reporting → Fourth quarterly update → Year-end review and adjustments → Other income and reliefs → Final Declaration

Unlike the traditional approach of submitting one annual self-assessment return, information is reported throughout the year and then finalised through a separate annual process.

The Final Declaration also includes a legal declaration confirming that the information is complete and accurate and that the taxpayer accepts responsibility for the submission.

This makes a thorough year-end review particularly important for accountants.

What does this mean for Nomi users?

According to the supplied Nomi development guidance, Nomi supports the core MTD ITSA setup and quarterly submission process. The following are identified as available:

• • Practice setup
  • HMRC authorisation
  • Client setup
  • Quarterly obligations
  • Quarterly submissions
  • Compliance reporting

The year-end functionality, Tax Summary, and Final Declaration, is identified as being in development and aligned with HMRC’s phased implementation. Accountants should refer to future Nomi release notes for the latest information on availability and functionality.

For accountants, the main priorities are accurate quarterly records, clear separation of business sources, careful year-end review, and timely completion of the Final Declaration.

Understanding this process will help accounting practices prepare their workflows and clients for the annual finalisation stage of MTD ITSA.

Frequently asked questions

1. Is overseas property treated as a separate business under MTD ITSA?
   Yes. Overseas property is treated as a separate qualifying business source and needs its own year-end review.

2. Are quarterly updates the final MTD ITSA submission?
   No. Quarterly updates report business income and expenses. The taxpayer’s full position is finalised through the Final Declaration..

4. When is the final declaration due?
   The deadline is 31 January following the end of the tax year, provided all required quarterly updates have been completed.