Making Tax Digital for Income Tax in FreeAgent for accountants
This article provides an overview of Making Tax Digital (MTD) for Income Tax and offers guidance on how to get ready for using it for your clients in FreeAgent.
Please note:
- FreeAgent’s MTD for Income Tax functionality is currently in pilot. Therefore, you’ll only have access to the functionality if your client’s business is eligible for HMRC’s pilot scheme and meets FreeAgent’s eligibility criteria.
- This functionality is not currently available for clients with unincorporated landlord FreeAgent accounts. However, we plan to support this shortly and will let you know once it is available.
Signing up for MTD for Income Tax is currently voluntary, and will help us and HMRC test and develop the service ahead of its launch. From 6th April 2026, it will become mandatory in phases based on your clients total annual income from self-employment or property, beginning with those whose joint income from their business/property is above £50,000 per year.
HMRC has published detailed guidance for sole traders, landlords, and accountants who want to volunteer to use and test MTD for Income Tax for the 2024/25 and 2025/26 tax years. After you’ve signed up to test MTD for Income Tax, you’ll get access to a dedicated support team at HMRC. You’ll also be able to review and update your details through HMRC Online Services.
Accessing FreeAgent’s MTD for Income Tax pilot functionality
First, you’ll need to set up your practice for MTD for Income Tax and connect your HMRC agent services account to FreeAgent.
Then, you can sign your eligible clients up to MTD for Income Tax.
Preparing your clients’ accounts in FreeAgent for MTD for Income Tax
Before you send quarterly updates to HMRC using FreeAgent, there are a number of things you’ll need to check to ensure that FreeAgent creates an accurate quarterly report for your clients.
1. Check your clients’ accounting dates
Make sure that your clients’ FreeAgent start date is correct, which is the date from which you started keeping their books in FreeAgent.
2. Check your clients’ MTD for Income Tax settings
Once you’ve signed your clients’ up to MTD for Income Tax in FreeAgent, an ‘MTD for Income Tax Business ID’ and ‘MTD for Income Tax Start Date’ will be added to their user profile in FreeAgent. Check that these are correct.
You can update these if you need to.
3. Ensure that all your clients’ transactions are recorded correctly in FreeAgent
In order to create your quarterly reports, FreeAgent needs to have the details of your clients’ bank transactions, invoices, bills and out-of-pocket expenses. Find out more about how to prepare your clients’ accounts for MTD for Income Tax in FreeAgent.
FreeAgent will automatically populate your clients’ total income for the quarter in the Income section of the Self Employment page.
Your clients’ total costs for the quarter will be automatically populated in the Expenses section of the Self Employment page.
Sending quarterly updates to HMRC for MTD for Income Tax
Quarterly updates can be submitted from the end of the quarter and are currently due on the fifth of the month after the end of the quarter. From April 2026, this deadline will be extended to the 7th of the month after the end of the quarter. The table in FreeAgent provides a useful timeline of when each quarterly update is due to be submitted. Find out how to switch to calendar quarterly update periods.
Once you’re happy with the information in your clients’ account, you can submit their quarterly tax data to HMRC.
Additional resources
You might find the following articles useful on MTD for Income Tax: