If someone has told your equity partners they must keep digital records and file quarterly from April 2026, that is wrong. Partnerships and LLPs are not in scope for Making Tax Digital for Income Tax, and HMRC has not set a date for them.
Article · 22 June 2026
Making Tax Digital for Income Tax started on 6 April 2026 for individuals with qualifying income over £50,000. Every accountancy firm in the country has been emailing about it, and a good number of law firm partners have concluded that they now have to file quarterly. For the average equity partner in an LLP, that is simply not true.
Two facts settle it. First, partnerships and LLPs are not in scope, and HMRC has not set a date. GOV.UK says that partnerships will need to use Making Tax Digital for Income Tax in the future, and that the timeline for this will be set out at a later date. Mandation of partnerships had previously been announced for 2025 and was dropped. Second, a partner's share of partnership profits is not qualifying income for that individual's own MTD test. So a partner whose only income is their profit share has no MTD obligation at all — not in April 2026, and not on any date that currently exists.
MTD for Income Tax applies to sole traders and landlords registered for Self Assessment whose qualifying income from self-employment and property exceeds a threshold. The threshold, the tax year HMRC tests it against, and the date mandation starts are all different numbers, which is where most of the confusion comes from.
The test looks backwards. Somebody entering the regime on 6 April 2026 is caught because of what their 2024/25 return said, which was filed by 31 January 2026 and cannot now be changed. That is why the April 2028 threshold matters more than it looks: it is tested on the 2026/27 tax year, which is running right now.
Not the partnership, and not the profit share. What catches people is the income they have alongside it.
Take an equity partner in a six-partner LLP with a profit share of £180,000, and three residential lets producing £28,000 of rents between them. The figures are illustrative.
The £180,000 profit share does not count towards the MTD test at all, because it is a share of partnership profits rather than the partner's own self-employment income. That leaves £28,000 of property income. Against the £50,000 threshold tested on 2024/25, they are well under, so nothing happens on 6 April 2026. Against the £30,000 threshold tested on 2025/26, they are still under, so nothing happens on 6 April 2027 either. Against the £20,000 threshold tested on 2026/27, they are over — so from 6 April 2028 that partner keeps digital records and files quarterly for the property business. Their profit share continues to be reported through the partnership and the Self Assessment return as it always has.
Note what the partner would have concluded from the emails: that they were in scope from April 2026 because their income is well over £50,000. The number that mattered was £28,000, and the date that mattered was two years later than the one they were worried about.
The firm's own accounts and the partnership return are unaffected by all of this. What is not unaffected is VAT: all VAT-registered businesses are already in Making Tax Digital for VAT and are signed up automatically — GOV.UK is explicit that you no longer need to sign up yourself. With the registration threshold at £90,000, essentially every law firm is already filing under MTD, whatever its partners are doing personally. What actually causes trouble on a law firm VAT return is the treatment of disbursements, covered in our VAT and disbursements guide.
Do not buy software for people who do not need it. A partner with no separate self-employment or property income has nothing to keep digital records for. Software licences, training time and a new quarterly rhythm bought on a misunderstanding are a real cost with no corresponding obligation.
Do check each partner individually. The obligation attaches to the person, not to the firm, which means the firm cannot answer it centrally. The question is simply: outside your profit share, what self-employment and property income do you have, and what did the relevant tax year show? That is a five-minute conversation per partner and it produces a definitive answer.
Do plan for partnerships eventually joining. GOV.UK's wording is that partnerships will need to use MTD for Income Tax in the future. When a timeline appears, the firms that already keep proper digital records will change very little, and the firms still working from a spreadsheet and a shoebox will change a great deal. That is an argument for tidying the bookkeeping on its own merits rather than in a panic later.
For most law firms, MTD is a smaller story than the money already sitting in unbilled work and unpaid invoices. Lockup is the number that decides whether the firm can pay its partners on time, and it is entirely within the firm's control in a way that HMRC's timetable is not. Our guide to lockup sets out how to measure it, and the lockup calculator puts a cash figure on every month of it.
On the tax side, what does land on partners this year is the remaining spread of transition profits from basis period reform, covered in the extra slice partners are still paying, and the dividend rate rise from 6 April 2026 if anyone is weighing incorporation. If you want the partner reserve worked out properly rather than estimated, that is what partner tax and drawings is for, and the LLP page explains how we work with partnerships.
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No. Partnerships and limited liability partnerships are not in scope for Making Tax Digital for Income Tax, and HMRC has not set a date for them. GOV.UK states that partnerships will need to use it in the future and that the timeline will be set out later. Separately, a partner's share of partnership profits is not qualifying income for that individual's own MTD test, so a partner whose only income is their profit share has no obligation at all. A partner is only brought in by self-employment or property income they hold in their own right, tested against the published thresholds for the relevant tax year.
Qualifying income is income from self-employment and property. It is tested against three thresholds on three different dates: over £50,000 measured on the 2024/25 tax year for mandation from 6 April 2026, over £30,000 measured on 2025/26 for 6 April 2027, and over £20,000 measured on 2026/27 for 6 April 2028. The test is backward-looking, so the return that decides whether you are caught has usually already been filed. A share of partnership profits does not count towards it, which is the point most commonly got wrong when the question is asked about a law firm.
Almost certainly yes, for VAT. All VAT-registered businesses are in Making Tax Digital for VAT and are signed up automatically, and GOV.UK confirms that you no longer need to sign up yourself. With the VAT registration threshold at £90,000, a law firm of any size is registered and therefore already keeping digital records and filing returns through compatible software for VAT purposes. That is a separate regime from MTD for Income Tax, with separate software requirements and separate deadlines, and being in one says nothing about whether any individual partner is in the other.
Work out the rents for the specific tax year HMRC tests, not the current one. If gross property and self-employment income exceeded £50,000 in 2024/25, they were mandated from 6 April 2026 and should already be keeping digital records. If it exceeds £30,000 in 2025/26 they join on 6 April 2027, and if it exceeds £20,000 in 2026/27 they join on 6 April 2028. The 2026/27 test is live now, so a partner near £20,000 should decide this year how they will keep the records rather than discovering the answer when the return is prepared. Their profit share is irrelevant to all three tests.
Not for a partnership obligation that does not exist and has no date. There is a real argument for improving the firm's bookkeeping, but it should be made on its own terms: faster management figures, cleaner client account records, less time spent at year end. Buying licences and retraining people for a quarterly filing regime that has not been announced is spending against a rumour. When HMRC does publish a timeline for partnerships, a firm with tidy digital records will need to change very little. That is the sensible preparation, and it pays for itself whether or not the timeline ever arrives.
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