Partnerships & Making Tax Digital for Income Tax
21st October 2025
Making Tax Digital for Income Tax comes into effect from 26/27 for sole traders and landlords with qualifying income of £50,000 or greater.
The table below shows how the threshold will lower in subsequent years:
| Tax Year | MTD for IT Income Threshold |
| 26/27 | £50,000 |
| 27/28 | £30,000 |
| 28/29 | £20,000 |
Sole traders and landlords subject to Making Tax Digital for Income Tax will be required to use compatible software to submit quarterly updates to HMRC, showing income and expenditure figures for each quarter. This is prior to submitting a final submission as part of the annual tax return process.
What Are the Requirements for Partnerships?
Currently, Making Tax Digital for Income Tax does not cover partnerships. Whilst no dates have been announced for introducing this, the Government have said that they “remain committed to the future introduction of MTD for ITSA to partnerships”. Therefore, it is important that partners are aware of Making Tax Digital for Income Tax and the requirements.
Income from partnerships is currently excluded from Making Tax Digital for Income Tax. However, partners with additional income from sole traderships or landlord activities, exceeding the Making Tax Digital for Income Tax thresholds, will be required to report that income quarterly to HMRC.
Partnerships may wish to prepare now for Making Tax Digital for Income Tax by beginning to use the compliant software.
Adopting software early may have other benefits including:
- reduced administrative burden,
- reduced debtor days
- real-time insights into business performance.
Businesses (including partnerships) exceeding the VAT turnover threshold (currently £90,000) are already required to be compliant with Making Tax Digital for VAT and maintain digital records. These businesses will likely find the only burden from Making Tax Digital for Income Tax to be the additional quarterly submission to HMRC. The VAT Return preparation within the software will also cover the preparation necessary for Making Tax Digital for Income Tax. Additional work will only arise where the income stream is not currently recorded on a quarterly basis.
Software which meets the Making Tax Digital for VAT requirements isn’t necessarily compliant with Making Tax Digital for Income Tax. It is therefore important to confirm that your software will support Making Tax Digital for Income Tax.
Get In Touch
If you’re in a partnership and require advice on software compliance or cloud accounting software, contact your local Whitings LLP office today.
Disclaimer - All information in this post was correct at time of writing.
