Jointly Owned Property and MTD: How Co-Owners Should Prepare for Digital Reporting

Jointly owned property is the norm rather than the exception for UK landlords. Couples buy together, siblings inherit together, friends invest together, and business partners pool capital together. Each of these arrangements has its own tax treatment, and each has implications for Making Tax Digital for Income Tax.

The headline good news is that MTD includes a useful easement for jointly owned property: co-owners do not both need to keep duplicate digital records of every transaction. One party can maintain the main records, and there is no requirement for digital links between the co-owners' systems. This is a practical acknowledgement that running two parallel accounting systems for the same property would be absurd.

But there are still decisions to make, information to share, and returns to coordinate. This post walks through the key points for jointly owned landlords preparing for MTD, with particular focus on married couples and civil partners, unmarried co-owners, and the special easements that apply to property held in this way.

The basic rule: each owner is separate

MTD for Income Tax applies to individuals, not to properties. Each co-owner is assessed separately against the qualifying income threshold, and each has their own MTD obligations if they cross it.

This means that a jointly owned property does not create a joint MTD obligation. Instead, each owner's share of the gross rent is counted as part of their personal qualifying income. If one owner is in MTD and the other is not, only the one above the threshold needs to file quarterly updates — for their share of the income.

Take a couple who own a rental flat generating £40,000 of gross rent. Under a 50:50 split, each has £20,000 of property income. The husband also runs a small consultancy turning over £35,000. His combined qualifying income is £55,000 — well over the £50,000 threshold — so he is in MTD from April 2026. The wife, with no other qualifying income, is not. Each reports their own share of the property income through their own channels.

Married couples and civil partners: the default 50:50

For married couples and civil partners, jointly owned property is taxed on a 50:50 basis by default, regardless of the actual beneficial ownership shown on the deeds. This is a specific tax rule that applies whether the real split is 50:50, 70:30, or anything else.

If the actual beneficial ownership is not 50:50 and the couple want to be taxed on the real split, they can file Form 17 with HMRC. Form 17 is a formal declaration of the true beneficial interest, supported by evidence of the actual ownership proportions. Once filed, the income is taxed accordingly.

For MTD purposes, the split used for tax purposes is also the split used for qualifying income. A couple who have filed Form 17 showing a 70:30 split will see £28,000 and £12,000 respectively from a £40,000 property — potentially bringing one partner into MTD while keeping the other out.

This is worth thinking about when you are near a threshold. A Form 17 declaration can shift property income between spouses in a way that affects MTD status as well as the headline tax bill.

Unmarried co-owners and other arrangements

For unmarried co-owners — including friends, siblings, and unrelated business partners — there is no default 50:50 rule. The income is split according to the actual beneficial ownership as shown in the deeds or declaration of trust.

Three siblings who inherit a rental property in equal shares each have a one-third share of the rent. If the property generates £45,000, each sibling has £15,000 of qualifying property income — below the thresholds, unless they have other income that pushes them over.

The same principle applies to unrelated co-investors who have bought property together. The percentage each owner holds determines their share of the rent for both tax and MTD.

The record-keeping easement

This is the most practically important MTD rule for jointly owned property. HMRC has recognised that requiring each co-owner to keep a full set of digital records of every transaction would be duplicative and pointless. Instead, an easement allows one party to maintain the main digital records on behalf of the joint ownership.

Under this easement:

• One co-owner keeps the main digital records of income and expenses.
• There is no requirement for digital links between the co-owners' separate bookkeeping systems.
• Each co-owner includes their share in their own quarterly updates, based on the data from the main records.
• Details of expenses can be submitted at year-end rather than quarterly, if the co-owners prefer.

This is a significant simplification. Without the easement, two spouses who jointly own a rental property would need duplicate sets of digital records — one in each of their separate MTD accounts — and they would both need to enter every rent receipt, every repair invoice, and every agent's deduction into their own software. The easement removes that burden.

Who should keep the main records?

In practice, the co-owner who is most engaged with the property or most comfortable with digital tools usually takes on the main record-keeping role. This might be the one who deals with the letting agent, the one who manages the bank account the rent is paid into, or simply the one who already does the books for a related business.

A few practical tips:

• Agree upfront who is responsible. Don't assume — have the conversation and document the arrangement.
• Share access to the software. The non-record-keeping co-owner still needs their own share of the numbers to put on their quarterly update. Modern MTD-compatible software usually allows multiple users with appropriate access levels.
• Keep a clear trail. If HMRC queries the figures, both co-owners need to be able to point to the underlying records and explain their share.

The net-income easement

There is a second easement for situations where a co-owner is typically only notified of their share of net income (after expenses have been deducted by the managing party). This often applies to beneficiaries of property trusts or co-owners in arrangements where one party handles all the expenses.

In these cases, the qualifying income test can be applied to the net figure rather than the gross. This makes sense because the co-owner may never even see the gross rental figure or the detailed expense breakdown — they just receive a net amount.

This easement does not override the general rule that qualifying income is gross rent where that information is available. It is specifically designed for situations where only the net figure is practically available to the co-owner.

Property in trust

Property held in trust is a more complex area, and different types of trust are treated differently for MTD. Here is a summary:

Trust Type	MTD Treatment
Trustees of most trusts	Automatically exempt from MTD IT
Bare trusts	Income reported by beneficiary; counts as beneficiary's qualifying income
Interest-in-possession trusts paying income directly to beneficiary	Same as bare trusts — counted as beneficiary's income
Charitable trusts	Exempt
Non-registered pension scheme trustees	Exempt
Personal representatives (deceased estates)	Exempt

If you are a beneficiary of a bare trust or an interest-in-possession trust that pays rental income directly to you, treat that income as part of your own qualifying income for MTD. Trustees of most trusts are automatically exempt from MTD IT and do not need to apply for exemption.

Property held in companies

MTD IT only applies to individuals. Property held in a limited company is outside the scope of MTD IT entirely — a company reports through Corporation Tax, not Income Tax.

Some landlords have been considering moving their portfolios into limited companies for various tax reasons (the mortgage interest restriction being the big one). This will take the property outside MTD IT, but it brings its own tax consequences — capital gains tax, stamp duty land tax, corporation tax, and the complexity of extracting profits as a director. The decision should be taken on its full merits, not just to avoid MTD.

A non-resident company chargeable to income tax on UK property income is automatically exempt from MTD IT.

Rearranging ownership before MTD

Because ownership structure affects MTD status, some landlords are considering rearranging their portfolios before the April 2026 mandate. Possibilities include:

• Transferring a share of ownership to a spouse to split income below a threshold.
• Filing Form 17 to change the declared split for an existing joint ownership.
• Transferring property into a partnership (note: partnership MTD is deferred).
• Restructuring into a company.

Each of these has tax consequences beyond MTD. Capital gains tax, stamp duty, and mortgage implications all need to be considered. Don't make a decision purely to dodge MTD — the savings from avoiding quarterly reporting are unlikely to outweigh transaction costs or unintended tax charges. But if a restructuring is on the cards for other reasons, the MTD implications should be part of the conversation.

Frequently Asked Questions

Q: Do both spouses need to sign up for MTD if we jointly own a rental property? A: Only if each of you individually has qualifying income above the threshold. If one spouse is over and the other is not, only the one above the threshold is in MTD — but each still includes their share of rental income on their own return.

Q: Who keeps the digital records for a jointly owned property? A: One co-owner can keep the main digital records on behalf of the joint ownership. There is an easement that removes the need for duplicate sets of records or digital links between co-owners' systems.

Q: Can we change our property income split between spouses? A: For married couples and civil partners, jointly owned property is taxed 50:50 by default. You can file Form 17 with HMRC to declare the actual beneficial ownership split if it is different, and that split will then apply for both tax and MTD qualifying income.

Q: I inherited a property with my siblings. How does MTD treat this? A: Each sibling reports their share of the rental income as part of their own qualifying income. If an individual sibling's combined income is above the threshold, they are in MTD for their share. The main record-keeping can be handled by one sibling with the others using those records for their own reporting.

Q: What if the property is in a trust? A: Trustees of most trusts are automatically exempt from MTD IT and do not need to apply. However, if you are a beneficiary of a bare trust or interest-in-possession trust receiving rental income directly, that income counts as part of your personal qualifying income for MTD.

Conclusion

Jointly owned property does not make MTD dramatically more complicated, but it does require some coordination. Work out each co-owner's share of the income, agree who will keep the main digital records, and make sure the numbers flow cleanly into each owner's quarterly updates. Married couples should consider whether a Form 17 declaration might help — both for tax and for MTD status. And if any restructuring is on the horizon, factor MTD into that decision alongside the other tax consequences.