Does Making Tax Digital apply to partnerships?
Not yet. Partnerships do not currently need to use Making Tax Digital (MTD) for Income Tax, and HMRC says it will set out a timeline at a later date, so no start date has been announced. As a partner, your share of the partnership's profit does not count towards your MTD qualifying income, but your own sole trade or rental income does.
What HMRC says about partnerships
GOV.UK says partnerships will also need to use MTD for Income Tax in the future, and that HMRC will set out the timeline later. Its exemptions page lists partnerships as not currently needing to use it. As at October 2026, GOV.UK gives no start date.
Until then, nothing changes for the partnership itself. The nominated partner sends the partnership tax return and keeps the partnership's records, and every partner sends their own Self Assessment return.
The new MTD penalty system does not apply to a partnership return sent by the nominated partner. The current Self Assessment penalties still apply to it, and if the partnership return is late, each partner is charged a penalty.
Your profit share does not count towards qualifying income
Qualifying income is your self-employment and property income before expenses. GOV.UK specifically leaves out your share of profit from a partnership as an individual partner.
So a partner whose only income is a profit share is not brought into MTD, however large the share. You do not need digital records or quarterly updates for it.
Example: Alice and Ben run a garden design partnership. Alice's share of the profit is £60,000 and she has no other self-employment or property income. Her qualifying income is nil, so she does not need MTD for Income Tax.
If you also have your own sole trade or rental income
Your own self-employment and property income still counts. If it is over the threshold on its own, you need MTD for that income, even though your partnership share is ignored.
- Over £50,000 in 2024 to 2025: you should have started on 6 April 2026
- Over £30,000 in 2025 to 2026: you start on 6 April 2027
- Over £20,000 in 2026 to 2027: you start on 6 April 2028
Example: Ben's partnership share is £45,000, and he also lets a flat for £24,000 a year. In 2025 to 2026 his qualifying income is £24,000, which is under £30,000, so he does not start in April 2027. If his rent is £24,000 again in 2026 to 2027, that is over £20,000, so he starts on 6 April 2028. His £45,000 share plays no part in either test.
Once you are in MTD, you keep digital records and send quarterly updates for your sole trade or property business only. Before you submit your tax return through your MTD software, you add your partnership profit share yourself: GOV.UK lists it as information you add, not information HMRC fills in.
Some software lets you add a partnership share during the year so your tax estimate is more complete, but you do not have to. See qualifying income for what else counts.
Income a partnership reports to you that does count
There is one exception that is easy to miss. Personal self-employment or property income that a partnership tells you about does count towards your qualifying income. GOV.UK says this includes disguised investment management fees and income-based carried interest, which are treated as profits of a specific trade.
If you are in MTD, you need digital records and quarterly updates for this income. If the partnership tells you the figures after a quarterly deadline, you can either estimate them and correct them later, or send updates showing nothing for that source and record the income once you are told.
If your fourth quarterly update has already gone, you resend it to include the confirmed figures before you submit your tax return.
Averaging relief claimed as a partner
If you would otherwise need MTD and you claimed averaging relief on the SA104 partnership pages of your 2024 to 2025 return, or reasonably expect to for 2025 to 2026 or 2026 to 2027, GOV.UK says you need to apply for an exemption. This is one of the exemptions that lasts until April 2027. See MTD exemptions.
MTD for VAT still applies to VAT-registered partnerships
MTD for VAT is a separate scheme. HMRC's VAT notice says it requires all VAT-registered businesses to keep digital records and file VAT returns using software, unless HMRC accepts that an exemption applies.
A partnership must register for VAT if its VAT taxable turnover is more than £90,000, and can choose to register below that. So if your partnership is VAT registered, it should already be using software for its VAT returns.
Being in MTD for VAT does not put the partnership into MTD for Income Tax. If a partner's own sole trade later needs MTD for Income Tax and that business is VAT registered, GOV.UK suggests checking whether its VAT software also works for Income Tax.
What partners should do now
- Keep sending the partnership return (if you are the nominated partner) and your own Self Assessment return as usual.
- Work out your own qualifying income from any sole trade or property, leaving out your partnership profit share. Our free MTD checker can help.
- If you are over a threshold, read how to sign up for MTD and choose software that lets you add a partnership share to your tax return.
- Ask the partnership whether it will report any personal self-employment or property income to you, such as carried interest.
- Keep the partnership's records in good order. HMRC has not said what partnerships will need to do under MTD, so watch GOV.UK for the timeline.
Keeping the records with Snapfile
Snapfile is built for sole traders and landlords, so a partner could use it for their own sole trade or rental income. You send photos of receipts and invoices, PDFs or texts on WhatsApp, and it records them, assigns HMRC expense categories, tracks the tax year and quarter, and exports a CSV. It does not submit anything to HMRC. It is free during early access, with a Pro plan planned at £9.99 a month.
Common questions
Does MTD apply to partnerships?
Not yet. GOV.UK says partnerships do not currently need to use MTD for Income Tax, and that HMRC will set out a timeline for them later.
When will partnerships have to use MTD for Income Tax?
HMRC has not given a date. GOV.UK says only that partnerships will need to use it in the future and that the timeline will be set out at a later date.
Does my partnership profit share count towards the MTD threshold?
No. Your share of profit as an individual partner is left out of qualifying income. Your own sole trade and property income does count, and so does any personal self-employment or property income the partnership reports to you, such as carried interest.
Do I need MTD if I am a partner and a landlord?
You might. Your rental income counts on its own, so if it is over the threshold you need MTD for it. You then add your partnership share to your tax return through your MTD software.
Do partnerships have to follow MTD for VAT?
If the partnership is VAT registered, yes. HMRC's VAT notice says MTD for VAT applies to all VAT-registered businesses unless an exemption applies.
Sources: GOV.UK: Find out if and when you need to use Making Tax Digital for Income Tax; GOV.UK: Find out if you can get an exemption from Making Tax Digital for Income Tax; GOV.UK: Work out your qualifying income for Making Tax Digital for Income Tax; GOV.UK: Use Making Tax Digital for Income Tax: Create digital records; GOV.UK: Use Making Tax Digital for Income Tax: Add or cease income sources; GOV.UK: Use Making Tax Digital for Income Tax: Submit your tax return; GOV.UK: Penalties for Making Tax Digital for Income Tax; GOV.UK: Set up a business partnership; GOV.UK: Business records if you're self-employed; GOV.UK: VAT Notice 700/22: Making Tax Digital for VAT; GOV.UK: Choose the right software for Making Tax Digital for Income Tax. This is general information, not tax advice; check GOV.UK or an accountant for your situation.
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