How to request a tax estimate using Making Tax Digital (MTD) for Income Tax

This article explains how to request a new or updated tax estimate from HMRC for Making Tax Digital (MTD) for Income Tax, also known as Making Tax Digital for Income Tax Self Assessment (MTD for ITSA), using FreeAgent.

Please note that FreeAgent’s MTD for Income Tax functionality is currently in pilot. Therefore, you’ll only have access to the functionality if you work with an accountant who is a FreeAgent partner and your business is eligible for HMRC’s pilot scheme. The functionality currently won’t be available if you have an unincorporated landlord account.

If you have a Practice Dashboard, you’ll need to switch to your client’s account to follow the steps below once you’ve set up your practice for MTD for ITSA and signed up your clients.

HMRC requires anyone registered for MTD for Income Tax to send quarterly updates about their business income and expenses to HMRC. Using the information that has been sent, HMRC can then provide an estimate of the tax liability due at the end of the accounting year, which will be displayed in FreeAgent.

The tax estimate can provide an overview of your emerging tax position to help you to budget for your tax liability due at the end of the tax year. Please note that the estimate is provided by HMRC based on your existing business income and expenses and is a projection for future quarters. Therefore, the estimate may increase or decrease in future quarters and may be different from the actual tax liability you’ll be due to pay at the end of the tax year.

You’ll need full (level 8) access to your FreeAgent account to request a new or updated tax estimate from HMRC.

Requesting a new tax estimate

Navigate to the 'Taxes' tab at the top of the screen and select 'Self Assessment' from the drop-down menu.

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Select the relevant tax year from either the list on the left-hand side of the panel or from the 'History' drop-down menu.

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Select ‘Get Tax Estimate’.

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Select ‘Submit Tax Data’ to send your current figures to HMRC in order to generate a tax estimate.

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Your tax estimate will appear in the ‘Your estimated tax liability’ panel.

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Once you’ve requested a tax estimate, you can send a quarterly update to HMRC.

Requesting an updated tax estimate

If you’ve previously requested a tax estimate from HMRC and entered more information into your FreeAgent account, you can request an updated estimate based on the new information.

To do this, navigate to the 'Taxes' tab at the top of the screen and select 'Self Assessment' from the drop-down menu.

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Select the relevant tax year from either the list on the left-hand side of the panel or from the 'History' drop-down menu.

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Select ‘Refresh Tax Estimate’.

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Select ‘Submit Tax Data’ to send your current figures to HMRC in order to generate an updated tax estimate.

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Your updated tax estimate will appear in the ‘Your estimated tax liability’ panel.

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Once you’ve requested an updated tax estimate, you can send a quarterly update to HMRC.

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