Viewing a breakdown of a tax estimate for Making Tax Digital 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.
Please note:
- FreeAgent’s MTD for Income Tax functionality is currently in pilot. Therefore, you’ll only have access to the functionality if your business is eligible for HMRC’s pilot scheme and meets FreeAgent’s eligibility criteria.
- This functionality is not currently available for unincorporated landlord FreeAgent accounts. However, we plan to support this shortly and will let you know once it is available.
- You’ll need full (level 8) access to send a quarterly update to HMRC once you’ve prepared your accounts in FreeAgent.
- 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 for MTD for Income Tax and signed up your clients.
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.
To view your annual tax estimate, navigate to the 'Taxes' tab at the top of the screen and select 'Self Assessment' from the drop-down menu.
Select the relevant tax year from either the list on the left-hand side of the panel or from the 'History' drop-down menu.
Your annual tax estimate will be displayed on the Self Employment page.
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. This 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.
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.
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.