MTD for Income Tax and Partnerships: The Partner Rules

Your share of partnership profit does not count when working out whether you must join Making Tax Digital for Income Tax. What can bring a partner in is everything else: a sole trader side business, or rent from a property you own personally. This guide shows partners how to test their own position, which income needs quarterly updates, and what still goes on the year-end return.

Key takeaways

• Partnership profit is ignored when you add up qualifying income for MTD for Income Tax.
• Your own sole trader turnover and gross rents still count, measured before expenses.
• If you are brought in, quarterly updates cover only those personal sources, not the partnership.
• The partnership share still goes on your tax return, which you file through MTD software.
• Partnerships as businesses have no confirmed MTD start date yet.

What does MTD for Income Tax mean for a business partner?

Making Tax Digital for Income Tax is HMRC's system for keeping digital records and sending quarterly summaries of income and expenses from software. Whether you are in depends on your qualifying income: the gross income from self-employment and UK or foreign property, before expenses. GOV.UK's qualifying income guidance is explicit that your share of profit from a partnership as an individual partner does not count towards that figure.

The thresholds then work the same way as for anyone else. If your qualifying income for 2024/25 was over £50,000, you are in from 6 April 2026. If it is over £30,000 for 2025/26, you join from 6 April 2027. Over £20,000 for 2026/27 brings you in from 6 April 2028. HMRC's eligibility checker applies these tests to your Self Assessment figures. Our guide to qualifying income covers the general rules in more depth.

Which of your income counts, and what needs quarterly updates?

Most partners we speak to have assumed one of two things: that the partnership profit pushes them over the line, or that being a partner exempts them altogether. Neither is right. The table below sets out how each typical source is treated.

The last row matters for a small number of people. GOV.UK notes that some personal self-employment or property income that a partnership tells you about, such as certain investment management fees, does count. If your partnership statement shows anything other than an ordinary profit share, ask your accountant which row it belongs in.

Step by step: testing your own position as a partner

1. Set aside the partnership statement. Your profit share is not part of the test, so put it to one side.
2. List every other self-employment you run in your own name. Use turnover, not profit. A small consultancy or online shop counts in full.
3. Add gross rents from any property you own personally. If you own a property jointly, use your share of the rents.
4. Compare the total with the threshold for the right year. 2024/25 against £50,000, 2025/26 against £30,000, and 2026/27 against £20,000.
5. If you are in, pick software that handles both jobs. It must send quarterly updates for your personal sources and let you add the partnership share at the year end. See our guide on running MTD with several income sources.
6. Sign up before your first quarter starts. Our sign-up steps walk through the process.

Worked example: two partners, two different answers

Illustrative example, invented figures, not a real client. Two people run a decorating partnership and split the profit equally, each taking a £41,000 share for 2025/26.

Partner A also lets out a flat, collecting £14,500 of rent in 2025/26. Qualifying income is £14,500. The £41,000 partnership share is ignored, so Partner A is under the £30,000 test and is not required to join from April 2027. If the rent stayed at about that level, Partner A would also be under the £20,000 test for 2026/27.

Partner B owns two buy-to-let flats producing £26,000 of gross rent, and runs a small evening sign-writing business with £9,000 of turnover. Qualifying income for 2025/26 is £35,000, which is over £30,000. Partner B must use MTD for Income Tax from 6 April 2027, sending quarterly updates for the rentals and the sign-writing business. The £41,000 partnership share is still reported, but only on the year-end return.

The point the example makes is that two people in the same business, with the same profit share, can have opposite MTD obligations. That is why each partner needs their own check rather than relying on what the partnership's accountant decides for the firm.

What stays the same for the partnership

The partnership itself carries on as before. The nominated partner files the partnership tax return (SA800), and each partner receives a statement of their share to copy into their own return. HMRC has not announced a date for general partnerships to keep digital records, so there is nothing extra to do at partnership level for now. Good habits still pay off: a firm whose books are already kept in cloud software will find any future change much easier.

Common mistakes

• Adding the partnership share into the test. This leads some partners to sign up early when they did not need to.
• Using rental profit instead of gross rent. The test uses income before expenses, so a landlord can be in scope even with thin profits.
• Forgetting jointly owned property. Your share of the rent from a property you co-own counts. Our jointly owned property guide explains the split.
• Leaving the partnership share off the final return. It does not need quarterly updates, but it must still be declared.
• Assuming the firm's accountant has checked for you. Your personal property and side income are often outside what the partnership's adviser sees.

How we can help

We check partners' MTD position source by source, set up software that handles quarterly updates alongside the partnership share, and file the year-end return. MTD compliance starts from £49/month on a fixed fee. See our MTD compliance service, view our pricing, or contact us with your latest partnership statement and rental figures.