Making Tax Digital: Joint ownership and other tricky topics

In just six months' time Making Tax Digital for Income Tax (MTD) will become a reality for many landlords, with a new set of rules around joint ownership and other models. Our chief policy officer Chris Norris takes a deep dive into the new system to tackle the tricky questions keeping you up at night.

Making tax Digital seems to have been on its way for an eternity. In fact, it was announced as ‘the end of the tax return’ as far back as 2015 and should have been introduced more than five years ago, had it not been subject to repeated delays – brought about in part by the complexity of designing a system to meet the needs of income tax self-assessment.  

Those with an eligible income above £50,000 will join in April 2026, over £30,000 in April 2027, with incomes over £20,000 mandated in April 2028. There has been no confirmation about landlords or the self-employed businesses who earn below this threshold, although it is fairly likely that they will be brought into scope in years to come.  

For those unfamiliar with MTD, the NRLA has created a resource hub and guide for members with everything you need to know, which can be accessed here.

Jointly owned property

One of the thorniest issues HMRC has been dealing with over the years of development involved in the MTD project, is exactly how to handle income from jointly owned property.

Despite being a very common ownership model - almost half of all self-assessment tax returns which declare rental income cite joint ownership of some property - this proved to be unexpectedly complicated to account for in the new digital service.  

We are assured by the scheme’s designers that they have now ironed out all of the wrinkles associated with joint income, but it has left some landlords a little confused about what income is in, and out, of scope for MTD.

I will try to address some of the most common questions and misunderstandings below. 

What is ‘qualifying income’ for MTD? 

MTD applies to landlords, and self-employed individuals, with an income above the relevant threshold (£50,000 for the 2026/27 tax year).

This ‘qualifying income’ includes rental income and income from any self-employed trading business. This includes income from UK and foreign property.  

It is the sum of any of the above income, before expenses. For instance, a self-employed plumber who also receives rental income from residential property should combine the income from both sources to calculate their ‘qualifying income’. 

It does not include income from paid employment subject to PAYE, incorporated business income, or income from other sources such as investments or interest.  

What if I own my properties jointly with my spouse or other individual? 

If you derive income from jointly owned properties, only your share of that income counts towards your ‘qualifying income’.

For instance, if a property portfolio is jointly owned by two people with equal shares and generates £50,000 pa gross rents, this will be split 50/50 between the owners.

In this case, as each will then have a ‘qualifying income’ of £25,000 pa they will not be mandated to join MTD until 2028.  

The same principle applies if the shared (or interest) in a property/properties is split unequally.

This means that in some instances, joint owners may be mandated to join the MTD programme at different times.

For instance, if two individuals split ownership of a property generating £100,000 pa of rental income according to a 60/40 split, one owner would have a ‘qualifying income of £60,000 and need to register for tax year 2026/27.

However, the other’s income would be £40,000 meaning that they need only register for MTD for the year 2027/28.  

Are there any other differences between sole ownership and joint ownership for MTD? 

Yes. In recognition of the additional complexities of joint ownership, HMRC issued an ‘update notice’ in January 2025 which amended requirements in respect of jointly owned property so that:  

• Income for jointly owned property must be recorded quarterly, in line with the MTD principles of quarterly reporting; but 

• Expenses need only be recorded annually as part of the end of year submission.  

For all landlords whose property income is joint, this could represent a significant simplification. However, it should be noted that this relaxation of the recording rules only applies to income from jointly owned properties – potentially complicating matters for those with a mixture of solely and jointly owned properties.  

What about income from a lodger, does this count towards my ‘qualifying income’?  

Yes. And No. Rental income from a lodger does count towards a landlord’s qualifying income, but not any portion within the tax-free allowance provided by the ‘Rent-a-Room’ scheme.

Under ‘Rent-a-Room’ the first £7,500 of relevant income (£3,750 if the income is shared with someone else) is considered tax-free, and as such does not count towards qualifying income.

However, any lodger income above this threshold should be added to your income for the purposes of establishing if or when you need to register with MTD. 

What if my ‘qualifying income’ varies year-to-year? 

For most people, once you’re in the MTD system you’re there until you stop operating as a business.

However, some people may meet the mandation threshold one year, but not the next.

In these instances, a landlord or someone with self-employed income will need to demonstrate that their ‘qualifying income’ is below the relevant mandation threshold for three consecutive tax years.

Only after this period would an individual be considered exempt from MTD for the following year.  

What if I own some of my properties through limited companies and some in my own name? 

This is increasingly common for landlords for a variety of reasons.

In this instance, only the income from those properties owned individually (and subject directly to Income Tax) is included in the calculation of ‘qualifying income’. Income received by the limited company should be declared as usual as part of the company accounts.  

Are there any exemptions? 

Yes. Although they are a little niche.  

Anyone who can demonstrate they are ‘digitally excluded’ may be granted an exemption by HMRC.  

According to the Government examples of digital exclusion are:  

• your age, health condition or disability stops you from using a computer, tablet or smartphone to keep digital records or submit them to HMRC  

• you’re a practising member of a religious society or order whose beliefs are incompatible with using digital communications or keeping digital records, and you do not use a computer, tablet or smartphone for business or personal use  

• you cannot get internet access at your home or business because of your location, and cannot get access at a suitable alternative location  

In addition to these exemptions, it was announced earlier in 2025 that certain groups will not have to comply with MTD during the current Parliament. These include:  

• Religious ministers 

• Lloyd’s underwriters 

• Recipients of the Married Couples’ Allowance and/or the Blind Persons’ Allowance.  

All in all, the move to MTD is going to be disruptive for many, and a big change in administation processes for most. Whether or not you are likely to be mandated into the system in the next few years it is a good idea to get prepared.  

NRLA has recently updated its Portfolio management platform for members to include Open Banking, allowing all income and expenditure to be tagged and categorised ready for self-assessment or MTD submissions - with the platform to be fully MTD ready by the April 2026 deadline.

For more information or a demonstration log-in to your account and look for the ‘P’ by your account details in the top-right of the screen.  

More information

For an opportunity to learn more about MTD and to talk to tax experts and HMRC about its implications, why not join us for our annual NRLA conference in Liverpool on 5th November 2025. We have an exclusive lightning session all about MTD and how to make the transition as seamless as possible. 

You can also sign up for our exclusive MTD eClassroom course. Run by expert tax trainers at our award-winning training academy the course will run through everything you need to be MTD ready, with lots of practical tips and advice on how to make the transition as smooth as possible. For information and to book click here.