Making Tax Digital for Jointly Owned Property: What Landlords Need to Know

Why jointly owned property is one of the most misunderstood MTD issues

Nearly half of all Self Assessment returns declaring rental income cite joint ownership. Many landlords incorrectly assume they can split their way out of MTD — or, conversely, that they must both comply regardless of their individual incomes.

The confusion arises because most landlords think about property income as a household figure. A couple that owns two properties generating £90,000 per year tends to think of that as "our rental income." But HMRC does not recognise the household as a tax unit for this purpose. It assesses individuals.

This creates three common misconceptions:

• Misconception 1: "We own it jointly, so our income is £90,000 each." Incorrect. Your qualifying income is your share — typically £45,000 each on a 50/50 split.
• Misconception 2: "We own it jointly, so neither of us needs MTD." This could be correct if both shares fall below the threshold, but it depends on each person's total qualifying income including other sources.
• Misconception 3: "Only one of us needs to do MTD on behalf of both." Incorrect. MTD is an individual obligation. You cannot file on behalf of your co-owner.

Getting these rules wrong has real consequences. If you assume you're below the threshold when you're not, you risk non-compliance penalties from April 2026.

How the MTD income threshold works for jointly owned properties

The MTD threshold applies to each individual's qualifying income separately. For jointly owned property, qualifying income is your proportionate share of the gross rental receipts — not the property's total income.

The mechanics are straightforward once you understand the individual basis:

1. Identify the total gross rental income from the jointly owned property
2. Calculate each owner's proportionate share based on beneficial ownership
3. Add each owner's property income share to any other qualifying income they have individually (self-employment income, income from other properties they own alone, etc.)
4. Compare each person's total qualifying income against the £50,000 threshold (April 2026) or £30,000 threshold (April 2028)

Worked example:

A property generates £90,000 per year in gross rent. It is owned 50/50 by two spouses, Alex and Sam.

In this scenario, Sam must use MTD from April 2026. Alex does not, unless their income increases or the threshold drops.

Key rule: It is each person's total qualifying income that matters, not the property's total income, and not the household's income.

The threshold applies to the combined qualifying income from all sources — property income, self-employment income, and any other income streams that fall within the MTD for Income Tax regime. Employment income (from a PAYE job) is not counted.

The default 50/50 rule for married couples and civil partners

HMRC's default rule for married couples and civil partners is that jointly owned property income is split equally — 50/50 — regardless of who paid for the property or who holds the mortgage.

This is known as the "beneficial interests" rule. It means that unless you have specifically elected otherwise using Form 17 (see below), HMRC will treat each spouse or civil partner as having received exactly half the rental income from any jointly owned property.

This rule applies to:

• Married couples (whether or not legally separated)
• Civil partners

This rule does not apply to:

• Unmarried couples (cohabitants)
• Business partners
• Siblings or other family members who own property together
• Friends who invest jointly

For all non-married joint owners, the income is split according to the actual beneficial ownership percentage, as recorded in the property deeds or a deed of trust.

Why the 50/50 default matters for MTD: If you are married and one of you is a higher-rate taxpayer while the other has no other income, the default 50/50 split may not reflect what you actually want for tax purposes. More importantly for MTD, it determines whose qualifying income figure crosses the threshold.

Form 17 — changing the split from 50/50

Married couples and civil partners can elect to split jointly owned property income in a different proportion using HMRC Form 17. The election must reflect actual beneficial ownership of the property and takes effect from the date of declaration.

Form 17 (the Declaration of Beneficial Interests in Joint Property and Income) allows you to override the default 50/50 split if your actual ownership of the property is in a different ratio.

When Form 17 can be used:

• When the property is held as tenants in common (rather than joint tenants)
• When there is a deed of trust confirming unequal beneficial ownership
• When the actual ownership percentages differ from 50/50

What Form 17 cannot do:

• Change ownership to an artificial ratio purely to reduce one person's tax or MTD obligations
• Declare an ownership split that does not match the actual legal and beneficial ownership
• Apply retroactively — it takes effect from the date HMRC receives the form, not from the start of the tax year

Process:

1. Confirm the actual beneficial ownership by reviewing the property title register and any trust deed
2. If you need to change the beneficial ownership, transfer a share of the property using a deed of trust (this requires a solicitor)
3. Complete Form 17 and send it to HMRC with a copy of the deed of trust within 60 days of signing the deed
4. HMRC confirms the new split, which then applies to income from that point forward

MTD implication of Form 17: Once a Form 17 election is in place, each owner's MTD qualifying income is calculated using the declared ownership percentage. If you have changed the split to 80/20, the larger-share owner will have a higher qualifying income for MTD threshold purposes.

It is worth consulting a tax adviser before making a Form 17 election, particularly if the main purpose is to influence which partner crosses the MTD threshold. HMRC takes a dim view of arrangements designed primarily to avoid tax obligations.

Reporting jointly owned property through MTD software

Each owner who is individually in scope for MTD must report their share of the property's income and expenses through their own MTD software account. Joint filing is not permitted.

The practical implications are significant:

Separate accounts: Both owners need individual MTD software accounts if both are in scope. Even using the same software product (e.g. both using LandlordOS), each person has their own account linked to their own Government Gateway credentials.

Separate quarterly updates: Each owner submits four quarterly updates per year reporting their share of the jointly owned property income and expenses. These submissions are made independently — there is no mechanism to submit jointly.

Shared records, separate submissions: In practice, it is sensible for co-owners to maintain a shared set of underlying records (income and expense entries for the property) and for each to submit their proportionate share. Good software handles this gracefully.

What each MTD submission covers for jointly owned property:

• Your share of gross rent received in the quarter
• Your share of allowable expenses paid in the quarter (or annually — see below)
• Any other property income you own solely

Your MTD submission covers your entire UK property business — not just the jointly owned property. If you also own properties in your sole name, those are included in the same quarterly update.

Annual expense reporting concession: HMRC allows an important concession for jointly owned properties: expenses do not need to be submitted quarterly. The in-scope owner can report all expenses for the jointly owned property in the End of Period Statement (EOPS) at year-end rather than in each quarterly update. This reduces the quarterly burden significantly.

What counts as qualifying income for jointly owned properties under MTD?

Qualifying income for MTD threshold purposes is gross rental receipts — income before any expenses are deducted — calculated at your ownership share. Net profit is irrelevant to the threshold calculation.

This is a common source of confusion. Many landlords assume the threshold works on profit. It does not.

What is included:

• Your share of rent received from tenants
• Your share of service charges received from tenants (where you collect and pass on)
• Your share of any other receipts directly from the lettings (e.g. parking charges, storage fees)

What is not included:

• Security deposits received (these are not income, as they must be returned)
• Capital receipts from property sales
• Compensation payments unrelated to rent
• Employment income (salary, wages from a PAYE job)
• Dividends from companies you own
• Interest and savings income

The income is typically measured on a cash basis for landlords — counting rent when you actually receive it, not when it is contractually due. This is HMRC's default for most individual landlords and simplifies record-keeping considerably.

Practical implication: If your jointly owned property has very high expenses (major repairs, high mortgage interest, letting agent fees), that does not reduce your qualifying income for MTD threshold purposes. A property generating £80,000 gross but running at a loss still produces £40,000 of qualifying income per owner on a 50/50 split.

Jointly owned property and the MTD threshold — worked examples

Whether you are in scope for MTD depends entirely on your individual qualifying income total. Here are four scenarios that cover the most common jointly owned property situations.

Example 1: Couple with one property, neither in scope

This couple is not in scope in April 2026 but may enter scope in April 2028 if the threshold drops to £30,000 and their income remains at this level.

Example 2: Couple with two properties, both in scope

Both owners must register for MTD and submit quarterly updates independently. Each will need their own MTD software account.

Example 3: Unmarried joint owners with unequal shares, only one in scope

Owner A must use MTD from April 2026. Owner B does not. Owner B may still choose to use the same software for record-keeping purposes, but their submissions are voluntary rather than mandatory.

Example 4: Sole trader landlord with a jointly owned property

This landlord must use MTD from April 2026 for both their self-employment income and their property income, because the combined qualifying income exceeds the threshold. Their MTD software must handle both income streams.

What if only one owner is in scope for MTD?

When only one co-owner crosses the MTD threshold, they must use MTD-compliant software for their quarterly updates. The out-of-scope co-owner can continue with annual Self Assessment.

This is a common scenario, particularly for couples where one has additional employment or self-employment income that pushes their total qualifying income above £50,000.

The practical arrangement:

• In-scope owner: Must register for MTD, set up approved software, submit quarterly updates, and file the EOPS and Final Declaration through software by 31 January
• Out-of-scope owner: Continues to file an annual Self Assessment tax return as before. No quarterly updates required. No MTD software mandatory (though using the same software for record-keeping is sensible)

Both owners can use the same property management software product for their records. Only the in-scope owner needs to connect that software to HMRC's MTD API and submit digitally. This avoids duplication of data entry while keeping each owner's compliance obligations separate.

Important: The out-of-scope owner's situation may change. If their qualifying income increases, or if the threshold drops (from £50,000 to £30,000 in April 2028), they may enter scope at that point. It is worth reviewing the position each year.

Jointly owned property and digital records under MTD

MTD requires digital records of all property income and expenses. For jointly owned properties, HMRC does not specify which co-owner maintains the master records — it is a practical decision for the owners to agree on.

The most pragmatic approach for jointly owned properties:

• Designate one owner as the primary record keeper for the jointly owned property. They maintain the income and expense log in the property management software.
• The second owner accesses or receives a copy of those records to use in their own MTD submissions if they are in scope.
• Each owner then reports their proportionate share in their individual quarterly updates and EOPS.

LandlordOS and similar property management platforms allow property-level record keeping that can be accessed by multiple users. This makes the shared-records model straightforward in practice.

What digital records must contain:

• Date each rental payment was received
• Amount received per payment
• Which property the income relates to
• Date of each expense payment
• Amount of each expense
• Category of expense (repairs, insurance, mortgage interest, etc.)
• Which property the expense relates to

You do not need to store physical receipts in the software, but you must retain the underlying evidence for at least five years after the 31 January deadline for the relevant tax year.

Inherited jointly owned properties

Properties inherited jointly — such as siblings inheriting from parents — follow the same rules as any other jointly owned property. Each inheritor's share counts against their own qualifying income.

Inheritance introduces some additional considerations:

Confirming the ownership split: When a property is inherited, the ownership percentages are determined by the will, the intestacy rules (if there is no will), or a deed of variation. Each inheritor must know their percentage before calculating their qualifying income.

Date ownership begins: You are treated as owning the property from the date of inheritance. Income received from that date counts towards your qualifying income from that point.

Probate period: Income received while the estate is in probate is technically estate income rather than personal income. Once probate completes and the property is transferred, income becomes personal income for MTD purposes.

Typical inherited joint ownership scenarios:

• Two siblings inheriting equally: each owns 50%, income split 50/50
• Three siblings inheriting a property: each owns 33.3%, income split three ways
• Surviving spouse inheriting everything: 100% ownership, all income counts as their qualifying income

If an inherited jointly owned property generates significant rental income that pushes one or more inheritors above the MTD threshold, they will need to register for MTD on that basis. The fact that the property was inherited rather than purchased makes no difference to HMRC.

Jointly owned property held with a limited company

If you personally own a share of a property alongside a limited company owning the remaining share, your personal share counts towards your individual MTD qualifying income. The company's share is subject to Corporation Tax, not MTD.

This mixed ownership structure is uncommon but does occur, particularly where a buy-to-let investor has transitioned some properties into a company structure but retained personal ownership of certain holdings or shares.

How it works:

• Your personal beneficial ownership percentage of the property — say 50% — determines your qualifying income from that property
• The company's 50% ownership generates corporate rental income, which is taxed as company profit and reported through Corporation Tax returns — not through MTD for Income Tax
• The company has no MTD for Income Tax obligations (MTD for Corporation Tax is a separate, later initiative)

Key point: Even where a company is a co-owner, your personal share of the income is treated exactly the same as if your co-owner were an individual. It is your percentage of the gross rent that counts towards your qualifying income threshold.

If you are uncertain about how a mixed personal/company ownership structure affects your MTD position, it is worth discussing with a tax adviser who understands both personal and corporate tax.