Sign your clients up to Making Tax Digital for Income Tax

This article provides a simple guide on how to sign your eligible clients up to Making Tax Digital (MTD) for Income Tax.

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. Check that your client is eligible to use FreeAgent to file MTD for Income Tax for the 2025/26 pilot year

You’ll be able to use FreeAgent to file MTD for Income Tax for the 2025/26 pilot year if your clients’ tax reporting needs are covered by the list below. If your clients have reporting needs that are not covered by the supported sections listed below, you shouldn’t sign them up for the 2025/26 MTD pilot.

HMRC currently hasn’t implemented a solution for an equivalent of the SA302 form. Therefore if your clients require documents equivalent to the SA302 form for, for instance, a mortgage application, we wouldn’t recommend signing them up for the 2025/26 MTD pilot for now.

During the 2025/26 tax year pilot, we’ll be expanding the Individual Information section to support additional reporting needs beyond Self-employment and UK Property business reporting.

For the 2026/27 tax year, we’ll support all available reporting requirements needed to file MTD for Income Tax to HMRC.

Supported reporting for 2025/26

Main Return (SA100)

• All sections supported
   

Additional Information (SA101)

• Interest from gilt-edged and other UK securities, deeply discounted securities, and accrued income profits
• Stock dividends, bonus issues of securities, and redeemable shares
• Share schemes, employment lump sums, compensation, deductions, post-employment income, and patent royalty payments
• Other tax reliefs
• Tax avoidance schemes
   

Employment (SA102)

• All sections supported
   

Self-employment (SA103F & SA103S)

• All sections supported
   

UK Property (SA105)

• All sections supported
   

Foreign Income (SA106)

• Foreign Tax Credit Relief
• Income from overseas sources – interest and other
• Income from overseas sources – dividends
• Dividend income received by a person abroad
   

2. Sign up for MTD for Income Tax with HMRC

Visit HMRC’s MTD for Income Tax client signup page and check their restrictions on who can sign up early for MTD for Income Tax.

As you’ll need your client’s permission to sign them up, please talk to your client first and tell them:

• What you’re signing them up to
• What it means for them
• That HMRC’s new penalties will apply to them if they miss deadlines for submitting their tax updates or paying their bill. HMRC has stated “During the testing phase, HMRC will not issue any late submission penalties for quarterly updates. This means if you sign up after the tax year starts, you only need to create all your digital records and send your updates before you submit your tax return. The deadline for this is 31st January following the end of the tax year.”
• HMRC will write to your client to confirm when late submissions would make them liable for these penalties

If your client has more than one business, you’ll need to sign up each business for MTD for Income Tax. They’ll also need separate FreeAgent accounts for each business and another separate account if they also rent out property that they own. For example, if your client is a landlord and a builder, they’ll need two FreeAgent accounts (one for the building business, one for the property) and will need to submit quarterly updates for each separately.

When you sign up a client through HMRC’s web portal, they will ask you some questions and carry out some checks to ensure your client can sign up and confirm this with you. Once you receive confirmation, you’ll be able to connect FreeAgent with HMRC for MTD for Income Tax.

3. Contact the FreeAgent support team

Once you’ve received confirmation from HMRC that you have signed up your client to MTD for Income Tax, contact the FreeAgent support team using the blue Help button at the bottom of the screen and ask them to switch on MTD for Income Tax filing for your client.

When contacting the support team, please ensure that support access is enabled and provide your account manager ID.

4. Switch your client to MTD for Income Tax filing in FreeAgent

Once you have signed a client up to MTD for Income Tax with HMRC, follow the steps below to switch them to MTD for Income Tax filing in FreeAgent. Please make sure the client has been signed up to MTD for Income Tax with HMRC before completing this step.

Navigate to the ‘Clients’ tab from your Practice Dashboard and select the name of the client you’d like to switch to MTD for Income Tax filing.

Select ‘Switch Company account owner to MTD Income Tax filing’ to complete the process. This will allow you to submit MTD for Income Tax returns from FreeAgent on that client’s behalf.

If you don’t see this button, it could be due to:

• The client not being set up as a sole trader
• The FreeAgent support team not having switched on MTD filing in your client’s account
• You not having connected your HMRC agent services account to FreeAgent

5. Check your client’s details

Next, you’ll need to check your client’s National Insurance number and MTD for Income Tax start date.

To do this, switch to your client’s FreeAgent account.

Then, select ‘Settings’ from the drop-down menu in the top-right corner of the screen and select ‘Users’.

Check that their National Insurance number has been entered and matches your records and HMRC’s.

FreeAgent will set the client’s MTD for Income Tax start date to be the start of the current tax year or to your client’s FreeAgent start date if later. FreeAgent uses this date to determine when to start aggregating information to send to HMRC as part of your client’s quarterly updates. Any transactions dated before this date will not be included in your client’s quarterly submissions.

Please note that if your client’s accounting year-end date is not 5th April or between 31st March and 4th April, HMRC have stated that they cannot sign up for the 2025/26 pilot year. If your client’s accounting year-end date is not 5th April or between 31st March and 4th April, you must set your client’s FreeAgent start date to 6th April of the current tax year or earlier.

This ensures that your client’s quarterly updates to HMRC only include accurate year-to-date information, based on transactions dated from the start of the tax year. If you don’t set your client’s FreeAgent start date to 6th April or earlier, you will exclude amounts within the tax year making your client’s submissions to HMRC inaccurate. This would result in your client paying the wrong amount of tax.

If your client’s accounting year-end date is dated on 5th April or between 31st March and 4th April, you can set a later FreeAgent start date than 6th April but you must ensure that your client’s opening balances are entered to include the total income and expenditure dated from the start of the tax year up to your client's FreeAgent start date. This will ensure that the year-to-date quarterly updates that FreeAgent sends to HMRC are accurate.

Repeat these steps for all your clients who are registered for MTD for Income Tax with HMRC.

What happens next?

Once the client has been successfully switched to MTD for Income Tax filing, you’ll see a message confirming this at the top of the client’s profile on your Practice Dashboard.

You’ll then be able to start sending quarterly MTD updates to HMRC for that client.

If you’ve registered more than one business for MTD for Income Tax for your client, you will be asked which business you want to link to your client’s FreeAgent account when you attempt to make your first quarterly submission, as FreeAgent will identify that there are multiple MTD businesses linked to your client’s account. Make sure you choose the correct business, as this cannot be changed once you have submitted a quarterly update for that client.