Income Inclusion and Qualifying Income

To determine whether an individual falls within MTD for Income Tax, HMRC looks at their qualifying income – the total turnover from self-employment and property. When it comes to jointly owned property, the amount to include depends on what information the individual receives:

• If you’re only given your share of the net income (i.e. after expenses), then that net figure is included in your qualifying income.
• If you’re provided with both income and expense details, then you must include your share of the gross income (before expenses) when assessing whether you meet the MTD threshold.

This means the qualifying income test is based on the nature of the information available to you, not a fixed rule about whether gross or net income is always used. It’s an important distinction, particularly when working with joint property owners who may not share full financial records.

Record-Keeping and Updates

Under MTD for IT, individuals must maintain digital records of their property income and expenses. Quarterly updates to HMRC are mandatory, summarising income and categorised expenses. There are specific categories for income (four categories) and expenses (nine categories), and these totals must be submitted quarterly.

Overseas Property Considerations

If an individual owns property both in the UK and overseas, separate quarterly updates are required for each property business.

Easements for Jointly Held Property

MTD for IT provides easements for reporting jointly held property income. Individuals can report income quarterly as per the specified categories and annual expenses within outlined categories. This simplifies reporting to just one entry per quarter for income and once annually for expenses.

Turnover Easements

Businesses with turnover below £90,000 can benefit from additional easements. For those qualifying, they can report a single income figure quarterly and annual expenses, further streamlining reporting obligations.

Specific Requirements for Residential Property Costs

Separate digital records are required for residential property finance costs (like mortgage interest), even when using easements.

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