Viewing a breakdown of a tax estimate for MTD for Income Tax
This article explains how to see a detailed breakdown of your tax estimate and your year-to-date tax position for Making Tax Digital (MTD) for Income Tax, in FreeAgent.
HMRC will provide you with an annual tax estimate based on the information submitted so far. This is then extrapolated by assuming the same income and deductions for the remaining days of the tax year, forecasting your final tax liability. As a result, the estimate may change in future quarters and may differ from the actual tax liability due at the end of the tax year.
Under MTD for Income Tax, FreeAgent does not calculate the tax estimate figure, instead receiving this directly from HMRC, so if you have any queries regarding the tax calculation, you would need to reach out to HMRC using the contact details in the letter they would have sent you when you joined MTD.
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 an 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 how to efficiently manage multiple income streams guide.
Please note:
- FreeAgent’s MTD for Income Tax functionality is available for sole traders and unincorporated landlords. Read our fast-track guides for sole traders and landlords for MTD for Income Tax.
- You may notice that your personal allowance doesn’t match the full annual allowance. This is because HMRC pro-ratas your personal allowance based on the number of days for which you have submitted information.
- If you use FreeAgent with your accountant, they may submit your quarterly updates, end-of-year updates and/or final declarations on your behalf and restrict your ability to access and submit these. They may also hide the annual tax estimate in your account. Please speak to your accountant if you have any questions or want to be able to access these. FreeAgent is unable to change these permissions for you.
- If you have a FreeAgent Practice Dashboard, you’ll need to switch to your client’s account to follow the steps below once you’ve set up your practice and clients for MTD for Income Tax.
Viewing a breakdown of a tax estimate for MTD for Income Tax
Navigate to the ‘Taxes’ tab at the top of the screen and select ‘Income Tax’ from the drop-down menu.
Select the relevant tax year from the list.
Your annual tax estimate will be displayed on the Self employment page if you have a sole trader account type and on the UK property page if you have an unincorporated landlord account type.
To see a detailed breakdown of the tax estimate and your year-to-date tax position based on the submitted information to date, select the 'Tax breakdown' tab.
The tax breakdown provided by HMRC displays your End of Year Estimate, Tax Summary and Allowances and Deductions.
End of Year Estimate
The End of Year estimate is calculated using your submitted year-to-date information to determine your current tax position. HMRC then projects this forward, assuming the same income and deductions for the remaining days of the tax year, to provide the End of Year Estimate.
Tax Summary
Below the End of Year Estimate, you'll find the Tax Summary. This shows the Income Tax and National Insurance calculated based on what you’ve submitted so far for the tax year in question, without projecting it forward to the end of the tax year. In other words, if you stopped trading after your last submission, this is what HMRC thinks you would need to pay.
Allowances and Deductions
Below the Tax Summary, you'll find a detailed breakdown of the calculations that make up the figures in the Tax Summary. You may notice that your personal allowance doesn’t match the full annual allowance. This is because HMRC pro-ratas your personal allowance based on the number of days for which you have submitted information.
For example, if your latest submission covers up to 5th February 2025 (275 days into the 2024/25 tax year), your personal allowance would be pro-rata’d as follows:
(275/365) × £12,570 = £9,471.00 (rounded to the nearest pound).
If you wish, you can submit an update to HMRC more frequently, for example monthly, to update your tax estimate.