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Making Tax Digital for Partnerships

Making Tax Digital for UK Partnership Businesses

Learn how Making Tax Digital for partnerships works. Find out when MTD applies, how to file jointly, and what UK partnerships need to do to stay compliant.

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Making Tax Digital for Partnerships

If you run a partnership in the UK, you’ll soon need to comply with Making Tax Digital (MTD) rules for Income Tax. While partnerships are not yet required to follow MTD for Income Tax Self-Assessment (ITSA), HMRC has confirmed that they will be brought into the regime in future phases. Preparation now will make the transition far easier when the rules do apply.

This guide explains how MTD for partnerships will work, who it affects, and what steps you can take to stay ahead.

Does MTD Apply to Partnerships?

Not yet but it will.

HMRC has announced that partnerships will be required to join MTD for ITSA in the coming years, after the rollout to sole traders and landlords (scheduled for April 2026–2027). The full timeline has not yet been confirmed, but the direction of travel is clear: partnerships will need to keep digital records and file quarterly updates through MTD-compatible software.

Here’s the current position:

Partnership TypeMTD Status
General partnershipsNot yet mandated, but expected to be included after April 2026
LLPs and mixed partnershipsTimeline to be confirmed, likely after general partnerships join
VAT-registered partnershipsAlready required to comply with MTD for VAT

At Accounting Wise, we recommend partnerships take early steps towards digital record-keeping now. That way, when HMRC confirms the start date, you’ll already have the systems and processes in place to comply smoothly.

How Will MTD for Partnerships Work?

When partnerships are brought into Making Tax Digital for Income Tax (MTD for ITSA), they will face new digital reporting obligations. Instead of filing a single annual return, partnerships will need to keep digital records and submit multiple updates throughout the year.

Under MTD, partnerships will be required to:

  • Keep digital business records – all income and expenses must be recorded in MTD-compatible software.
  • Submit quarterly updates – every three months, a summary of the partnership’s income and expenses must be sent to HMRC.
  • File an End of Period Statement (EOPS) – at the end of the accounting year, the partnership will finalise its figures and make any adjustments.
  • Provide a Final Declaration – confirming the total tax liability for the partnership’s income.

A key difference from sole traders is that partnerships must file these updates jointly through a nominated partner, who will be responsible for submitting the digital records to HMRC.

Each individual partner will still need to submit their own Self-Assessment return for any income outside the partnership, such as dividends, rental income, or other self-employment earnings.

Who’s Responsible for Filing?

Under Making Tax Digital, partnerships will need to appoint a nominated partner who is responsible for managing the partnership’s compliance. This nominated partner will:

  • Register the partnership for MTD with HMRC.
  • Keep and maintain digital business records using approved software.
  • Submit quarterly updates, the End of Period Statement (EOPS), and the Final Declaration on behalf of the partnership.

The other partners are not required to submit MTD updates individually. However, they remain responsible for:

  • Checking the accuracy of the partnership’s reported figures.
  • Submitting their own Self Assessment tax return for any personal income outside the partnership (e.g. dividends, rental income, or employment).

This joint approach ensures that the partnership’s obligations are met centrally, while each partner continues to account for their own wider tax affairs.

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MTD Quick Links

What is Making Tax Digital
Do I Need to Register for Making Tax Digital?
Making Tax Digital Timeline and Rollout
How to Sign Up for Making Tax Digital
Making Tax Digital Deadlines and Dates
Making Tax Digital for VAT
MTD Income Tax (MTD for ITSA)
Making Tax Digital for Corporation Tax
Making Tax Digital Exemptions
Common MTD Mistakes and Avoiding Them
Making Tax Digital for Partnerships
Making Tax Digital for Limited Companies
Making Tax Digital for Sole Traders
Making Tax Digital for Landlords
Making Tax Digital Compliant Software
Making Tax Digital Bridging Software
How Accountants Can Help with MTD

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What Software Will Partnerships Need?

Like sole traders and limited companies, partnerships will need to use MTD-compatible software to meet their obligations once Making Tax Digital for Income Tax is introduced. The right software will allow you to:

  • Record partnership income and expenses digitally and accurately.
  • Track VAT (if the partnership is VAT-registered).
  • Connect directly with HMRC’s systems for seamless submissions.
  • Submit quarterly updates, the End of Period Statement (EOPS), and the Final Declaration without manual re-entry.

Approved Tools for Partnerships

  • Xero – scalable and flexible, well-suited to growing partnerships.
  • FreeAgent – simple to use, ideal for smaller or service-based partnerships.
  • QuickBooks – popular with a wide range of businesses for its ease of use and integrations.
  • Bridging software – a short-term option for those still using spreadsheets, but not recommended for the long term.

When Will MTD for Partnerships Start?

HMRC has confirmed that partnerships will be brought into Making Tax Digital after sole traders and landlords, but no official start date has yet been announced. Based on current guidance:

  • General partnerships – expected to join the MTD regime after April 2026.
  • Complex partnerships (LLPs, mixed partnerships, or those with corporate members) – expected to follow at a later stage, with timelines still to be confirmed.

Even without a set date, HMRC encourages businesses to prepare early by digitising records and familiarising themselves with quarterly reporting. Doing so will ensure a smooth transition when the rules do come into force.

What Happens If You’re Not Ready?

When MTD for partnerships becomes mandatory, non-compliance will carry real consequences. If a partnership fails to meet its obligations, it could face:

  • Penalties under HMRC’s points-based system – repeated late or missed submissions will add up and trigger fines.
  • Rejected submissions – returns not filed through MTD-compatible software will not be accepted by HMRC.
  • No fallback to paper filing – manual methods will no longer be available, meaning compliance depends on digital systems.

Preparing early with the right software and processes avoids last-minute disruptions and keeps your partnership on the right side of HMRC.

Can Partnerships Be Exempt?

Yes exemptions are available, but only in limited circumstances. A partnership may be able to claim exemption if:

  • It is digitally excluded (for example, due to lack of internet access, disability, or age).
  • It has religious grounds that prevent the use of technology.

Exemptions are not automatic – you must apply directly to HMRC and provide evidence to support your case. For full details, see our MTD Exemptions and Deferrals Guide.

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How Accounting Wise Can Help

At Accounting Wise, we specialise in helping partnerships prepare for the upcoming Making Tax Digital requirements. Whether you operate as a small family-run business or a larger multi-member LLP, our tailored services make the transition simple and stress-free.

Our support includes:

  • MTD-compliant software setup – we’ll recommend and implement the right tools for your partnership.
  • Digital record-keeping guidance – ensuring your income and expenses are organised, accurate, and HMRC-ready.
  • Quarterly submission support – we’ll manage updates on your behalf, so deadlines are never missed.
  • Partner Self Assessment coordination – aligning partnership reporting with each partner’s personal tax obligations.

Prepare for Making Tax Digital Now

MTD for partnerships is on the horizon. By preparing your systems now, you’ll avoid last-minute pressure, reduce risk of penalties, and enjoy the benefits of clearer, more efficient financial reporting.

Speak to our expert team today and get your partnership MTD-ready the easy way.

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Making Tax Digital FAQs for Partnerships

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Yes but only certain types. General partnerships with business or property income above the MTD threshold will be required to comply with MTD for Income Tax Self Assessment (ITSA). However, limited liability partnerships (LLPs) and partnerships with corporate partners are not included in the first rollout.

The government has confirmed that general partnerships will join MTD for ITSA after the rules are in place for sole traders and landlords. No exact date has been set, but it will not begin before April 2027. Partnerships should monitor HMRC updates to stay prepared.

  • Included initially: General partnerships (two or more individuals running a business together).
  • Not included initially: Limited liability partnerships (LLPs), partnerships with corporate members, and large complex partnerships. These groups are expected to be considered later, once MTD is established.

Partnerships must:

  • Keep digital records of all income and expenses
  • File quarterly updates to HMRC using MTD-compatible software
  • Submit an end of period statement (EOPS) to confirm totals for each accounting period
  • Complete a final declaration, which replaces the annual partnership tax return

Partnerships will need HMRC-recognised MTD-compatible software. Options include Xero, QuickBooks, Sage, FreeAgent. The software must be able to manage partnership income, handle multiple partners, and link directly to HMRC for submissions.

Yes, but only if bridging software is used to connect spreadsheets to HMRC’s systems. This method is less efficient and carries a higher risk of errors. Most partnerships benefit from using fully integrated MTD-compliant accounting software.

If a partnership is required to follow MTD but fails to do so, it risks:

  • Being unable to file required returns
  • Late filing penalties from HMRC
  • Interest charges on unpaid tax

Working with an accountant ensures the partnership stays compliant and avoids unnecessary fines.

At Accounting Wise, we help partnerships prepare for MTD by:

  • Advising on when MTD will apply to them
  • Setting up and managing the right accounting software
  • Migrating records into secure digital systems
  • Handling quarterly updates and annual submissions

We ensure partners stay compliant while focusing on running their business.

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Accounting Wise is a trading style of Accounting Wise Ltd, a limited company registered in England under company number 09365202. Our registered office is: The Carriages, Station Road, Ware, SG12 9PL UK.

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