Making Tax Digital for Partnerships: Rules, Deadlines & Setup

Making Tax Digital (MTD) is a government initiative to bring Income Tax into a fully digital system, so you can manage and report everything online.

MTD for partnerships isn’t in the cards yet, but it will be, and that makes early preparation important.

Read on to learn more about Making Tax Digital for partnerships and how to get systems in place. So, by the time MTD becomes mandatory, you’ll already be ahead of the game.

Key points

• MTD means digital, ongoing tax reporting 💻
  You’ll keep digital records, submit quarterly updates, and finalise them at year-end instead of filing once a year.
• Partnerships aren’t included yet, but you should prepare now ⏳
  There’s no start date yet, but early preparation helps avoid stress and penalties later.
• MTD applies to individuals first 👨‍💼
  Even if your partnership isn’t included, you may need to comply based on your own income.
• Preparation is all about systems and habits ✅
  Review your setup, go digital, choose software, and assign clear roles.
• Using the right tools can make MTD almost effortless 🔥
  Managing digital records, deadlines, and filings manually can get complicated, especially in partnerships. ANNA automates bookkeeping, tax estimates, MTD updates, and filings, so you stay compliant without the stress and at a fraction of the usual cost.

What is Making Tax Digital?

Making Tax Digital is HMRC’s plan to modernise the tax system by moving records and filing online.

Instead of filing one annual Self Assessment return, certain businesses will:

• Keep digital records
• Submit updates every quarter
• Sort out their final tax bill at the end of the year

The main goals behind MTD are to reduce errors, improve accuracy, and give businesses a clearer picture of their finances throughout the year.

Initially, those who fall under MTD are sole traders and landlords registered for Self Assessment who get income from self-employment, property, or both.

HMRC doesn’t look at your other types of income, and they don’t count toward the thresholds below.

MTD started on 6th April 2026 and has three stages depending on the qualifying income.

If your income was:

• £50,000 for the 2024 to 2025 tax year, you started on 6th April 2026
• £30,000 for the 2025 to 2026 tax year, you’ll start from 6th April 2027
• £20,000 for the 2026 to 2027 tax year, you’ll start from 6th April 2028

💡 Good to know:

You must submit your usual Self Assessment tax return first, and only after that can you switch to MTD.

Making Tax Digital for partnerships: When do you need to join MTD?

Partnerships will join MTD in the future, but the exact date isn’t known yet.

So, if you’re in a partnership, you can continue using the current Self Assessment system for now. But you should definitely start preparing.

When the change comes, it won’t be small, and leaving it to the last minute can only add stress and increase the risk of potential filing or late-payment penalties.

💡 Good to know:

Each partner needs to look at their own income. If individual income from self-employment or property goes over the threshold, the current MTD rules apply.

Whether you run the partnership or you’re a partner in one that’s coming under MTD later, the sooner you get ready, the smoother the process will be.

How should partnerships start preparing for MTD?

Here are the practical steps to prepare for MTD:

1. Check your current setup

The first thing is to check how you’re currently running things:

• Are you still using spreadsheets or paper to track income and expenses?
• How do you know how much profit each partner has made?
• Are your systems connected, or are you manually transferring data between accounts and spreadsheets?

The answers will help you spot weak points in your current workflow.

For example, if you’re still scanning receipts and storing them in a folder, that’s going to make quarterly updates a headache under MTD.

On the other hand, if you already use some digital tools, you might just need to upgrade them or connect them properly.

2. Choose HMRC-approved software

HMRC-approved software keeps your records accurate and digital and sends updates straight to HMRC.

When picking the right software, here’s what to think about:

• Ease of use: You don’t want something overly complicated. Look for a tool that’s simple to use, but still has all the features you actually need.
• Scalability: Make sure your software can grow with your business. You shouldn’t need to switch tools as soon as your partnership expands.
• Partnership-friendly features: Some software caters only to sole traders. Confirm that your top pick can handle multiple partners, profit shares, and proper reporting for your whole team.

3. Start digitising your records

If most of your records are still on paper or scattered across different spreadsheets, now’s the perfect time to go digital.

Switching over makes MTD compliance a lot easier and gives you a real-time view of your finances.

You should start small and build good habits with:

• Digital receipts and invoices: Scan or upload everything to your accounting software.
• Automated expense tracking: Connect your bank accounts so transactions are recorded automatically.
• Real-time bookkeeping: Log income and expenses as they happen, instead of waiting until the end of the month or year.

4. Define roles within the partnership

MTD means you’ll be reporting more often, so everyone needs to know exactly what they’re responsible for:

• Who’s entering transactions and keeping the records up to date?
• Who’s double-checking the numbers before sending updates to HMRC?
• Who’s talking to the accountant to make sure everything stays compliant?

Sorting out these roles now makes reporting later much smoother and keeps everyone accountable.

A simple responsibilities chart can help. It doesn’t need to be fancy, just something that clearly shows who does what and when.

5 key challenges for partnerships preparing for MTD

Partnerships face unique challenges with MTD: complexities of working with multiple partners, profit allocation, system integration, adjusting to change, multiple income sources, and stricter deadlines.

1. Complexities of working with multiple partners

The more partners you have, the trickier it can be to keep everyone’s records in sync.

Each partner has their own share of profits, expenses, and personal tax situation.

Also, partners may have different types of income, such as self-employment or property, which affect their thresholds individually.

You need to track each partner’s share accurately.

Quick tip: Keep a single central digital record of the partnership’s finances, but make sure to track each partner’s share accurately.

2. Profit allocation timing

Partnership profits aren’t always split equally, and sometimes the way profits are shared can change during the year.

With MTD’s quarterly reporting, it’s important to keep track of these allocations as they happen. If you don’t, mistakes can creep in and lead to inaccurate updates and extra work when it’s time to finalise your tax return.

Quick tip: Decide early how profits will be split, and write it down. Whenever allocations change, update your accounting software straight away to keep your records accurate.

3. System integration

Many partnerships use multiple tools, spreadsheets, accounting software, bank accounts, or even paper receipts.

MTD asks for digital links between systems. Manually copying data from one tool to another isn’t compliant, and it increases the risk of errors.

Quick tip: Choose software that integrates well with your bank and other tools, and consolidate wherever possible.

4. Adjusting to change

Switching to digital systems and quarterly reporting can feel like a big change, especially if your team is used to doing everything at year-end.

Some partners may resist learning new software, or old habits, such as keeping paper receipts, can stick. Without clear processes, confusion and mistakes can sneak in.

Quick tip: Start training partners early, create simple guides, and assign responsibilities.

5. Staying compliant with deadlines

Quarterly reporting means deadlines come faster than a single year-end return. It’s easy to fall behind if roles aren’t clear.

Missed deadlines can trigger penalties and create extra work for everyone.

Quick tip: You can use a shared calendar or project management tool to track updates, reviews, and submission dates.

Another option is to use accounting software that automatically handles deadlines and sends timely reminders.

How can ANNA help partnerships get ready for MTD?

ANNA is a one-stop business app that can register your company, manage invoices, and file VAT, Corporation Tax, and MTD Self Assessment for you.

You just need to talk to ANNA, upload your docs, and everything else happens automatically: books, returns, and filings.

With ANNA, you can keep accounting costs down to just 10% of the usual, because cutting-edge tech, automation, and AI handle all the hard work.

Here’s what ANNA does for you:

✨ Provides a UK business account with cards, transfers, and financial management all in one place

✨ Prepares quarterly MTD updates automatically, making submissions hassle-free

✨ Files your year-end Self Assessment straight to HMRC

✨ Sets up smart tax pots that automatically put aside a portion of your money, so you’re never caught off guard

✨ Handles bookkeeping with Auto Accountant and keeps everything organised and up to date

✨ Calculates and files VAT returns automatically, sent directly to HMRC

✨ Automates, calculates, and files company accounts and Corporation Tax

✨ Helps you send faster invoices with card payments and get paid quickly while we handle chasing

✨ Gives you a personalised tax calendar to keep your business on track with deadlines and reminders

🔥 File your MTD Self Assessment for FREE

For your first year, we’ve got you covered: MTD Self Assessment for Income Tax is completely free, and we’ll also handle your 2025–26 filing at no cost.

Already filed your 2025–26 return with another software? We’ll refund what you paid for that account when you switch over.

Start with ANNA today to be fully prepared when MTD knocks on your door.