How does split ownership for landlords work with Making Tax Digital?

In some cases, there may be sole traders or landlords who only own part of a property, such as if you’re married or other forms of shared ownership.

If you own part of a property and need to file using Making Tax Digital for Income Tax, you should only need to record your share of the income and expenses. For example, if you own 50% of a property, then only 50% of the property's income and expenses should be logged as your business finances, rather than the total income and expenses of the property.

You can record this in the Monzo app by splitting the transactions and setting your portion of the funds as allowable, and the remaining amount as disallowable.

This also applies to the gross income threshold for when Making Tax Digital is mandatory for your business. If the business owns 75% of a property, then you should use 75% of the properties total income to figure your gross annual income, e.g. you own 75% of a property that made £100,000 last year, which means your business’ gross annual income for that year was 75% of £100,000 or £75,000. You would then need to report 75% of the properties income and expenses to HMRC using our Making Tax Digital tool.

This means that with shared ownership, both owners might need to use separate HMRC approved software if they’re required to follow the Making Tax Digital rules.