Set up your practice for Making Tax Digital for Income Tax

This article provides a simple guide on how to register your practice for Making Tax Digital (MTD) for Income Tax and link your FreeAgent Practice Dashboard with HMRC.

Signing up for MTD for Income Tax is currently voluntary, and will help us and HMRC test and develop the service ahead of its launch. From 6th April 2026, it will become mandatory in phases based on your clients’ total annual income from self-employment or property, beginning with those whose joint income from their business/property is above £50,000 per year.

HMRC has published detailed guidance for sole traders, landlords, and accountants who want to volunteer to use and test MTD for Income Tax for the 2024/25 and 2025/26 tax years. After you’ve signed up to test MTD for Income Tax, you’ll get access to a dedicated support team at HMRC. You’ll also be able to review and update your details through HMRC Online Services.

1. Create an agent services account with HMRC

First, you’ll need to create an agent services account with HMRC for your practice if you haven’t already got one. This will generate a new Government Gateway ID which will give your practice access to HMRC’s MTD services.

If you file MTD for VAT returns for clients, you should already have an agent services account in place with HMRC and don’t need to create a new account. Instead, log in and follow the steps outlined below.

2. Add your practice’s Government Gateway details to your HMRC agent services account

If you’ve recently created an agent Services account, you may need to copy across your existing clients’ authorisations from your old HMRC online services account. If you have multiple sets of credentials, you will need to add them all to your agent services account in order to link the authority for all your existing clients.

3. Request authority to file MTD for Income Tax returns on behalf of any new clients

You’ll also 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.

4. Connect your HMRC agent services account to FreeAgent

Once you’ve successfully created your agent services account and any new clients have authorised your new agent relationship, you’ll need to use your agent services account credentials to connect FreeAgent to HMRC.

To do this, log in to your Practice Dashboard, select ‘Settings’ from the drop-down menu in the top-right and then choose ‘HMRC connections’.

Select 'Connect for MTD Income Tax'.

Next, select 'Continue' and follow HMRC’s on-screen instructions to complete the process.

Please make sure you are not signed into 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 into. 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.

What happens next?

Your HMRC agent services account will be connected to FreeAgent and your practice will be set up for MTD. Next, you’ll need to set up your clients for MTD for Income Tax in FreeAgent.

Please note that HMRC requires you to reconnect FreeAgent to HMRC every 18 months.