Manage a client’s MTD for Income Tax submissions as an accountant user
This article explains how to activate Making Tax Digital (MTD) for Income Tax functionality and send submissions to HMRC for a client that has added you as a user with the role of ‘Accountant’ in FreeAgent.
If you’re a FreeAgent Partner, please read how to set up your practice and clients for MTD for Income Tax instead of following the steps below.
If you haven’t joined the FreeAgent Partner Programme and your client has added you as a user to their FreeAgent account with the role of ‘Accountant’, follow the steps below to connect to HMRC, activate MTD for Income Tax functionality for the client and send quarterly updates on their behalf.
If you become a FreeAgent partner, you get access to a Practice Dashboard which is a tool that allows FreeAgent partner accountants to view and manage their clients’ FreeAgent accounts. FreeAgent’s Partner Programme offers a range of benefits and discounted pricing options, including on the cost of add-ons, that get bigger and better as the number of active licences on your Practice Dashboard increases.
Please note:
- Your client will need to have given you full (level 8) access to their FreeAgent account when adding you as a user.
- FreeAgent’s MTD for Income Tax functionality is available for sole trader and unincorporated landlord clients. Read our fast-track guides for sole traders and landlords for MTD for Income Tax.
- If your client has more than one income stream, for instance if they're self-employed and also a landlord, they'll need a sole trader and an unincorporated landlord account in FreeAgent. They can find out what counts as multiple income streams, as well as tips for managing more than one income stream, in our how to efficiently manage multiple income streams guide.
1. Connect FreeAgent to HMRC
First, you’ll need to request authority to file MTD for Income Tax returns on behalf of any new clients directly from your agent services account. Please note that these clients must have a business tax account to be able to authorise a new agent relationship.
Once you’ve done this, select 'Connections & Add-ons' from the drop-down menu below your client’s business name.
Select ‘Get started’ in the ‘HMRC connections’ section. Please note that only users with full (level 8) access will be able to see the ‘HMRC connections’ section.
Select ‘Connect FreeAgent to HMRC for Income Tax’. Please note that the screen you’ll see will depend on whether or not your client is VAT-registered and has the MTD for VAT connection set up.
Next, follow HMRC’s on-screen instructions to complete the process.
Please make sure you are not signed in to any other HMRC accounts in another window at the same time, as this can cause HMRC to incorrectly link the account you are currently logged in to. If you are not asked to enter your agent services account credentials (user ID and password) during this process then close all browser windows and try again. This will avoid HMRC connecting the wrong HMRC account.
During this step, HMRC requires the person setting up the connection to verify their identity, rather than a specific person in your practice. You’ll have five attempts and you’ll need to provide HMRC with the following information:
- Name
- Date of birth
- National insurance number
- Postcode
HMRC will also ask you to verify your identity by answering questions on two of the following options:
- UK Passport
- UK Driving Licence
- Self Assessment
- Tax credits
- Credit record
If the verification process takes too long, HMRC may need you to start over again.
Select ‘Give permission’ to complete the process and you will be directed back to your Practice Dashboard in FreeAgent.
When the connection is completed successfully, you’ll see the following screen. Please see the steps to take if the connection was unsuccessful.
2. Activate MTD for Income Tax functionality
Next, select ‘Activate MTD Income Tax for the company account owner’.
Alternatively, select ‘Settings’ from the drop-down menu in the top-right corner of the screen and select ‘Users’.
Select your client’s name from the list.
Select ‘Activate MTD for Income Tax for this user’.
If your client hasn’t entered their National Insurance (NI) number in their user profile, enter their NI number in the field provided and select which tax year you want to make MTD for Income Tax submissions for on behalf of the client.
Select ‘Connect FreeAgent to HMRC for Income Tax’.
HMRC requires you to update your MTD connection every 18 months. FreeAgent will display an ‘Expiring soon’ warning in the 'HMRC Connection' box on the right-hand side of your client’s MTD for Income Tax returns 10 days before the connection is due to expire.
3. Send quarterly updates
You can choose to send either full expenses or consolidated expenses. We do not send individual transactional data to HMRC because this is not required.
Read how to send a quarterly update to HMRC for MTD for Income Tax in FreeAgent and how to automate quarterly MTD for Income Tax submissions.
4. End-of-year update and final declaration
After the end of the tax year, you’ll need to send an end-of-year update to finalise the total income and costs and enter any annual adjustments and allowances.
Then, to close off the submissions for the tax year, you’ll need to send a final declaration covering all of your client’s income sources and individual information.
Additional resources
You might find the following articles helpful for MTD for Income Tax:
- Prepare for MTD for Income Tax in FreeAgent
- Switch to calendar quarterly update periods for MTD for Income Tax
- How to use FreeAgent for MTD for Income Tax if you’re a sole trader with multiple businesses or rental income
- First year of MTD for Income Tax submissions
- Supported income sources for MTD for Income Tax
- Viewing a breakdown of a tax estimate for MTD for Income Tax
- Request data from HMRC for MTD for Income Tax