Making Tax Digital qualifying income can be misunderstood where a rental property is owned jointly because the threshold is not necessarily based on the property’s total rent and it is not normally based on the taxable rental profit after ordinary expenses. The starting point is the individual’s own qualifying share of gross self-employment and property income, subject to specific rules where the joint owner only receives a figure after expenses have already been deducted.
This matters increasingly from 2026/27 because Making Tax Digital for Income Tax is now in operation for the first mandatory group.
How Making Tax Digital qualifying income is measured for joint property
An individual looks at qualifying income from self-employment and property when determining whether they fall within the mandatory regime. The assessment is based on the relevant income shown on the most recently required Self Assessment return rather than waiting to see what the current year’s profit eventually becomes.
For jointly owned property, it is the individual’s share of the property income that counts. If two siblings own a rental property equally and the property generates £50,000 of income, each would normally have £25,000 of qualifying property income from that property.
The current Making Tax Digital qualifying income guidance specifically confirms this approach to jointly owned property. Where the individual is only notified of their share after property expenses have already been deducted, the amount notified can instead be used for the qualifying-income assessment.
This exception should not be confused with a general rule that qualifying income means taxable profit.
The thresholds are being introduced in stages
Individuals whose qualifying income shown on their 2024/25 return exceeded £50,000 became subject to Making Tax Digital for Income Tax from 6 April 2026, unless an exemption or other exclusion applies.
Those with more than £30,000 of qualifying income on the relevant 2025/26 return are due to enter from 6 April 2027. The threshold then falls to more than £20,000 from 6 April 2028 based on the relevant 2026/27 income.
The staged timetable is set out in the current Making Tax Digital start-date guidance.
An individual with £28,000 of gross self-employment income and a £25,000 share of jointly owned rental income can therefore have £53,000 of qualifying income even if allowable business and property expenses reduce the combined taxable profit substantially.
Making Tax Digital qualifying income is different from jointly owned partnership income
Joint ownership of a property does not automatically create a partnership. This distinction has become particularly important under MTD.
Where individuals simply own and let property jointly, each owner’s share of the property income can form part of their qualifying income. By contrast, a share of profit received as an individual member of a genuine partnership does not currently count towards the individual’s qualifying-income threshold in the same way. HMRC updated its MTD guidance in January 2026 to clarify the partnership position.
Whether a property activity amounts to a partnership therefore depends on the legal and commercial facts, not on whether the owners casually refer to themselves as partners.
Joint landlords have specific digital-record easements
Once an individual is within MTD, jointly let property has specific record-keeping concessions. A joint landlord only needs to create digital records relating to their own share of income and expenses.
The rules also allow simplified recording for jointly let property. An individual may create less detailed digital records and may choose not to include expenses relating to jointly let properties within quarterly updates, while still dealing with the relevant information through the wider annual reporting process.
This easement is practically important where one co-owner or managing agent keeps the full property records and periodically reports each owner’s share to them.
It does not remove the need for a reliable underlying calculation of ownership percentages, gross rents and deductible expenses.
Ownership percentages must be established correctly
The share used for tax reporting should follow the relevant beneficial ownership and property-income rules. Married couples and civil partners living together may be subject to the statutory 50:50 income rule unless a valid alternative treatment applies. Other co-owners are generally taxed according to their beneficial entitlement.
A joint landlord should therefore resolve the ownership and income allocation before determining the MTD figure. Using half the rents merely because two names appear on the title can produce the wrong result where beneficial ownership or the legal tax rule produces another allocation.
Property income should continue to be reconciled through the appropriate landlord tax return calculations. Where self-employment, several jointly owned properties or different ownership ratios interact with the MTD threshold, the wider Self Assessment position should be reviewed before deciding whether the individual falls within mandatory digital reporting.
Disclaimer: This article is provided for general guidance only and does not constitute personal tax, legal or financial advice. The correct tax treatment depends on the specific facts, applicable legislation and HMRC practice at the relevant time. You should contact us for advice tailored to your circumstances before taking or refraining from any action.
