Partnerships are not yet within Making Tax Digital for Income Tax. HMRC says they will need to use it in future and that it will set out the timeline later, so for now partnerships keep filing the SA800 partnership return in the usual way. Individual partners are affected already if they also have their own self employment or property income over the threshold, but their partnership share is left out of the qualifying income test and out of the quarterly updates.

Are partnerships in MTD for Income Tax now?

No. HMRC’s guidance on whether and when someone needs to use the service says that partnerships will also need to use Making Tax Digital for Income Tax in the future and that HMRC will set out the timeline at a later date. The statutory framework explains why the current rules do not reach them. Schedule A1 to the Taxes Management Act 1970 defines a “relevant activity” for an individual, and paragraph 1(3)(a) says that an activity carried on in partnership is not a relevant activity. The Income Tax (Digital Obligations) Regulations 2026 (SI 2026/336) impose obligations on relevant persons only, so a trade carried on in partnership is outside them.

The partnership return therefore continues as before, filed by the nominated partner with a partnership statement showing each partner’s share. See our page on partnership tax returns (SA800).

What powers already exist for partnerships?

Although no partnership regulations have been made, Schedule A1 already contains the powers HMRC would use, which gives a fair indication of how partnership MTD is designed to work:

  • Which partnerships. Paragraph 2 makes a partnership a “relevant partnership” if one or more of the partners is an individual, unless all of its income producing activities are of excluded kinds (such as a Lloyd’s underwriting partnership). A partnership made up only of companies is not a relevant partnership.
  • Nominated partner. Paragraph 5 says requirements imposed on a partnership are to be met by a nominated partner, chosen by the partners or by HMRC, with a nomination taking effect only when HMRC is notified.
  • Periodic updates. Paragraph 7 allows regulations requiring a relevant partnership to send HMRC information about its business electronically, at or for specified times.
  • A digital partnership return. Paragraph 10 allows regulations requiring a Schedule A1 partnership return, including the partnership statement, due on or before 31 January following the tax year.
  • Digital records. Paragraph 11 allows regulations requiring electronic records. Paragraph 5(1) does not apply to records, and under paragraph 12 each person who was a partner during the period is liable to a penalty of up to £3,000 if record keeping requirements are not met.
  • Digital exclusion. Under paragraph 14(3), a partnership is digitally excluded only if the exclusion condition is met for each partner.

The last two points have practical consequences when the rules arrive. Record keeping failures expose every partner, not just the nominated partner, and one partner who is comfortable with software is likely to stop a partnership from qualifying as digitally excluded.

How does a partner’s own MTD position work?

A partner can be within MTD in their own right because of a sole trade or property income held outside the partnership. HMRC’s guidance on qualifying income sets the rules:

  • A share of profit from a partnership as an individual partner does not count towards qualifying income.
  • The partner does not keep digital records or send quarterly updates for that share.
  • The share must still be included in the tax return submitted through MTD software.
  • Personal self employment or property income that a partnership tells the partner about does count, including disguised investment management fees and income based carried interest, and needs digital records and quarterly updates.

For that last category, HMRC’s record keeping guidance allows the partner to estimate the income and correct it once confirmed, or to send nil updates and record the income when notified. If the fourth update has already gone, it must be resent with the confirmed figure.

How does this look for a typical partner?

Illustration only. Priya is a partner in a two partner design practice and her profit share for 2025 to 2026 is £60,000. She also lets a flat she owns alone, with gross rent of £14,000, and runs a small online shop as a sole trader with turnover of £19,000. Her qualifying income for 2025 to 2026 is £33,000: the rent and the shop turnover. The partnership share is ignored. Because £33,000 is over the £30,000 threshold for that year, Priya must use MTD from 6 April 2027. She sends quarterly updates for the flat and the shop separately, and adds her partnership share from the partnership statement before submitting her 2027 to 2028 return through software. The partnership itself carries on filing an SA800.

Which penalty rules apply?

HMRC’s guidance on MTD penalties says the new points based late submission and late payment penalties do not apply to a partnership return submitted by a nominated partner. The current penalties for late partnership returns continue. A partner who is in MTD for their own income is under the new regime for their personal return from the year they join, while the partnership’s return remains under the old one. Firms with partner clients should keep the two calendars separate in their workflow.

What about partnerships registered for VAT?

VAT is different. MTD for VAT already applies to VAT registered partnerships, because the VAT rules apply to every VAT registered business. HMRC’s sign up guidance for agents asked for the partnership’s Unique Taxpayer Reference and the postcode where it is registered for Self Assessment for a general partnership, and also the company registration number for a limited partnership. So many partnerships already keep digital VAT records, which may ease the eventual move for income tax. See Making Tax Digital for VAT and our page on MTD for VAT agent services.

How are jointly owned lettings treated?

For MTD, HMRC’s guidance treats each joint owner of a let property as reporting their own share within their own property business, not as a partnership. Whether a particular arrangement amounts to a partnership turns on the facts; our page on jointly owned rental property covers the test, and MTD for jointly owned property covers the reporting rules.

What should partnerships and their advisers do now?

  • Identify partners who have sole trades or property income of their own and test their qualifying income without the partnership share.
  • Collect partnership statements early enough to complete those partners’ MTD returns, since a partner cannot finalise their own return without the figure for their share.
  • Check whether the partnership’s records are already in software that could support quarterly reporting, particularly if it uses MTD for VAT.
  • Confirm who the nominated partner is and that HMRC has been told.
  • Watch for HMRC’s announcement of the partnership timeline rather than planning around an assumed date.

What mistakes come up most often?

  • Adding a partner’s profit share to qualifying income and signing them up too early.
  • Forgetting to add the partnership share to the MTD return because it never appeared in the quarterly updates.
  • Assuming the partnership must already send quarterly updates.
  • Treating carried interest or similar personal income reported by a partnership as part of the excluded partnership share.

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Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 8 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.