MTD for Jointly Owned Property: The Headache Nobody Warned You About

Two owners, two sets of filing

If you own a rental property with someone else, Making Tax Digital treats you as two separate taxpayers. Each owner files their own quarterly updates. Each owner needs their own software setup. You can't file a single joint return.

This is one of the most under-discussed complications of MTD, and it catches a lot of couples off guard.

How the income split works

Each co-owner reports their share of the rental income and their share of the expenses. If you own a property 50/50, each person reports half the income and half the expenses.

This matters for the income threshold too. Say a couple jointly owns a property bringing in £60,000 a year in rent. Each person's qualifying income from property is £30,000. At £30k each, neither hits the £50,000 threshold for the April 2026 start date. But both would be in scope from April 2027 when the £30k threshold kicks in.

If the ownership split is something other than 50/50, each person reports their actual share.

Double the admin

This means two lots of everything:

• Two software subscriptions (unless you use a free tool)
• Two sets of quarterly submissions
• Two final declarations

If one of you handles all the property management, that person probably needs to manage both sets of records and submit on behalf of both. Or each person needs to be set up and involved.

Either way, it's more admin than most jointly owned property landlords expected.

Watch your expense claims

A common mistake with jointly owned property: claiming 100% of the expenses when you only own 50%. If you and your spouse own a flat 50/50 and the boiler replacement costs £3,000, each of you claims £1,500, not £3,000.

The same goes for mortgage interest, insurance, agent fees, and every other expense. Everything gets split according to your ownership share.

Does the threshold count my partner's income?

No. Each person's qualifying income is calculated individually. Your partner's self-employment income doesn't get added to yours for threshold purposes. Only YOUR self-employment income and YOUR share of property income count towards YOUR threshold.

But your own self-employment income and your share of property income DO get combined. So if you personally earn £20,000 from freelancing and your share of jointly owned rental income is £35,000, your qualifying income is £55,000.

Quarterly relaxation for expenses

HMRC has acknowledged that splitting expenses quarterly between joint owners is fiddly. There's a concession that allows joint owners to report gross income quarterly and leave the detailed expense allocation to the year-end final declaration.

This means your quarterly updates can be simpler, with the full expense breakdown only needed once a year. Check with your software or accountant whether this applies to your situation.

What to do

1. Work out each person's share of income. Based on your ownership split (usually 50/50 for married couples, but it doesn't have to be).

2. Set up software for each owner. Both of you need to be registered for MTD and have compatible software. See our free MTD software list if cost is a concern.

3. Agree who does what. If one person manages the property, they might handle both sets of records. Make sure both sets of quarterly updates get submitted.

4. Track expenses carefully. Record the full expense amount but report only your share. Keep it clear in your records so there's no confusion.

5. Consider if your ownership split is optimal. This is one to discuss with an accountant. The way you split property ownership between spouses can affect your tax bills and which MTD thresholds you fall under.

For the broader picture of how MTD works for rental income, read our MTD for landlords guide. And check the quarterly deadlines so both owners know when to submit.