Income Tax in FreeAgent
This article explains whether you need to use Making Tax Digital (MTD) for Income Tax or Self Assessment to report your income to HMRC in FreeAgent.
MTD for Income Tax
From 6th April 2026, MTD for Income Tax became mandatory in phases based on your total qualifying income from self-employment and/or property, beginning with those whose total income from their business and/or property was above £50,000 for the tax year 2024/25. The threshold for needing to use MTD for Income Tax lowers each year to:
- Qualifying income £30,000 or over in 2025/26; start MTD for Income Tax from 6th April 2027
- Qualifying income £20,000 or over in 2026/27; start MTD for Income Tax from 6th April 2028
HMRC requires anyone registered for MTD for Income Tax to keep digital records and send four quarterly updates about their business and/or property income and expenses to HMRC every year. They will also have to submit an end-of-year update for each income stream, and a final declaration covering all of their information after the end of the tax year. Read more about the first year of MTD for Income Tax submissions and MTD for Income Tax on mobile in FreeAgent.
If you have more than one income stream, for instance if you're self-employed and also a landlord, you'll need a sole trader and a separate unincorporated landlord account in FreeAgent. You can find out what counts as multiple income streams, as well as tips for managing more than one income stream, in our guide on how to efficiently manage multiple income streams.
Browse our full hub of MTD for Income Tax support articles to learn everything you need to know about setting up and submitting MTD for Income Tax in FreeAgent.
Self Assessment
If your qualifying income is under the threshold of MTD for Income Tax, but you still need to file a tax return, you would use a traditional Self Assessment tax return to work out your Income Tax and report your income to HMRC.
The figures in your tax return will include your business's accounts if you're a sole trader and your property income and costs if you’re an unincorporated landlord.
Browse our full hub of Self Assessment support articles to learn everything you need to know about completing and filing Self Assessment in FreeAgent.
As MTD for Income Tax is being gradually phased in, you should be aware of when you might need to start using it in the future. Check out the MTD for Income Tax section above to learn more about when you might have to make the switch.