Many landlords own rental property jointly with someone else. This might be a husband and wife, a parent and child, siblings, or two friends investing together.
Under Making Tax Digital (MTD) for Income Tax, jointly owned property does not mean one person reports all the income and then splits the tax afterwards. Instead, each owner usually reports their own share of the property income and expenses.
Understanding how these shares work is important because it affects both your MTD threshold and the figures you submit in your quarterly updates.
For most jointly owned property, each person is taxed on the share of rental profits they are entitled to.
This means each owner reports their share of:
For example, if two friends own a property equally, each normally reports 50% of the income and 50% of the expenses.
If three siblings own a property with shares of 40%, 30% and 30%, each owner reports those proportions in their own tax records.
Under Making Tax Digital, this approach continues. Each owner submits their own quarterly updates and final declaration using their own figures.
The MTD threshold is based on qualifying income from property and self-employment.
For jointly owned property, it is your share of the income that counts.
Two siblings own a property generating £50,000 of rent each year.
If they own the property equally:
This means one owner might be required to join MTD earlier than another if they have additional self-employment or property income.
In most cases, income and expenses are divided according to the same ownership percentage.
| Annual totals | |
|---|---|
| Rental income | £30,000 |
| Allowable expenses | £8,000 |
| Owner | Income | Expenses |
|---|---|---|
| Owner A (60%) | £18,000 | £4,800 |
| Owner B (40%) | £12,000 | £3,200 |
Each owner then calculates their own property profit.
Under MTD, landlords normally submit quarterly updates containing summaries of income and expenses.
The standard approach is to include your share of both income and expenses in each quarterly update.
| Quarter totals | |
|---|---|
| Rent received | £6,000 |
| Expenses | £1,500 |
| Each owner reports | |
|---|---|
| Income | £3,000 |
| Expenses | £750 |
This keeps the figures accurate during the year and reduces the need for adjustments later.
Married couples and civil partners have a special tax rule.
If they own property jointly and live together, the rental income is normally treated as being split 50/50 for tax purposes.
This applies even if the property ownership percentages are different.
If the couple want to be taxed based on their actual ownership shares, they must submit Form 17 to HMRC and provide evidence of their beneficial interests.
Normally taxed 50/50 unless Form 17 applies.
Income usually divided based on ownership percentage.
Income and expenses usually divided based on the agreed ownership share.
Each person reports their share of the rental profits.
SimplifyMTD helps landlords submit their Making Tax Digital updates easily.
For jointly owned property, each owner simply enters their share of income and expenses. The software then prepares the quarterly update and final declaration in line with HMRC requirements.
This means landlords can stay compliant with Making Tax Digital without complex accounting software.
Jointly owned rental property is common, and the rules continue under Making Tax Digital.
In most cases, each owner reports their own share of income and expenses based on their ownership percentage.
By keeping clear records and submitting regular updates, landlords can ensure they remain compliant with the new digital reporting rules.