Private use adjustments in MTD

Background

Generally the test for being able to claim a business or property expense is if it is wholly and exclusively for that activity.

But some things which would otherwise be claimable may still be subject to an adjustment if there is anything other than incidental private use.

What is an example of private use?

Private use may include your own use (or family use) of a property that you rent out - such of a holiday home.

You may also use your phone for a mixture of business and personal activity.

How to handle this in MTD and in "untied"

There are two ways to make private use adjustments in Making Tax Digital.

The first way is to simply make a partial claim of the expenses. This keeps the adjustment at the level of individual transactions.

The second option is to make a single adjustment as part of the end of year process, and this is more common if the adjustment is being made by an accountant. They can do so through a reverse transaction to reduce property or business income, or by an adjustment in the final MTD stage (as part of BSAS - the Business Source Adjustable Summary).

Holiday lets

Private use is a common feature of holiday lets, which may be partly occupied for some of the year, with paying guests at other times. While the separate tax treatment of furnished holiday lets (FHL) ended in April 2025, a private use adjustment is still required.