A workable way to price Making Tax Digital for Income Tax is a recurring fee built from three parts: the bookkeeping or record checking behind each quarterly update, the updates themselves for each business, and a separate year end element for adjustments and the tax return. The fee should follow who keeps the records and how many businesses the client has, and the basis must be explained and confirmed in writing before the work starts.

What new work does MTD actually create?

Before setting a price, list the tasks HMRC’s guidance now requires for each client:

  • A quarterly update for each self employment and property business. All UK property counts as one business, all foreign property as another, and each trade is a separate business.
  • An update even for a quarter with no income or expenses.
  • Updates that are cumulative from the start of the tax year, so corrections made to records flow into the next one.
  • After the fourth update, accounting and tax adjustments, capital allowances, and a resent fourth update if records need correcting.
  • Adding other income and gains, checking the figures HMRC has added, and getting the client’s written confirmation before the main agent submits the return.
  • Reauthorising the firm’s software connection every 18 months.

The standard deadlines are 7 August, 7 November, 7 February and 7 May, and the return is still due by 31 January after the tax year. A client with a trade and a rental portfolio therefore generates eight quarterly submissions a year plus the return, against one return under the old system.

What do the professional rules say about fees?

ICAEW’s fee information helpsheet quotes paragraph 330.4 of the Code of Ethics, which requires the accountant to explain the basis on which fees will be calculated and give an estimated initial fee at the earliest opportunity, and paragraph R330.5, which requires fee quotes or the basis of fees in writing, normally in the engagement letter. The level of fee is a commercial decision, and may reflect time, seniority, risk and responsibility, complexity and the importance of the work to the client.

Two points from the helpsheet bear directly on MTD pricing. A firm that sets a fixed fee is expected to honour it, so the work it covers must be clear. And payments by standing order or direct debit can lead a client to assume they cover everything, so the terms need to say whether they do. See fixed fees and hourly rates and monthly fee plans.

What drives the cost of a particular client?

The biggest variable is who keeps the digital records. Where the client records transactions in compatible software, the firm’s quarterly work is review and submission. Where the firm does the bookkeeping, the quarterly fee carries the processing time. The professional bodies’ guidance on MTD under PCRT expects proportionate checks on the data, with challenge where figures differ from what the firm expects. It does not expect nil updates where there was activity, estimates based on earlier quarters, or updates built on partial information, except where HMRC easements allow. That rules out pricing a cheap quarterly service that leaves the real work to the year end.

Other drivers are the number of businesses, jointly let property, an accounting period that does not run to 5 April or 31 March, and traditional accounting rather than the cash basis, which brings accruals and prepayments adjustments after the fourth update. Where a bookkeeper acts as supporting agent and the firm is main agent, the firm’s quarterly role may be small but its year end role is larger, because a supporting agent cannot submit the return or see the tax calculation. See supporting agents.

How are practices structuring the fee?

Three structures are worth considering, and each can work if the scope is written down.

  1. A single monthly fee covering records review, all quarterly updates and the year end return, with the number of businesses and a transaction volume band stated.
  2. A quarterly fee per business plus a year end fee, which makes the cost of an extra trade or a foreign property visible to the client.
  3. Tiers by record keeping, for example client keeps records and the firm reviews and submits, or the firm keeps records and submits everything.

Whichever structure is used, state what triggers extra charges: catching up on late records, cleaning up a ledger, resending an update after the client changes figures, or adding a new business partway through the year. Our guide to value pricing covers packaging services around outcomes.

How should the first year be handled?

The first MTD year is the most expensive to deliver. For clients mandated from April 2026, the firm is preparing the last old style return for 2025 to 2026, due by 31 January 2027 under the old penalty rules, while running quarterly updates for 2026 to 2027. Software setup, client training and sign up all fall into the same period. HMRC is not charging penalty points for late quarterly updates in 2026 to 2027, but the final quarterly update must still be sent before the return can be submitted, so that easing does not remove the work. A separate one off onboarding fee, outside the recurring fee, is one way to recover this.

How do you explain the new fee to clients?

A higher fee is easier to accept when the client can see the obligation behind it. Explain that the law now requires an update for each business every quarter, give them the four dates, and explain the penalties from 2027 to 2028 onwards: a point for each missed deadline, with only one point per deadline however many businesses are late, and a £200 penalty when a client reaches 4 points and for each later missed deadline. Show them what the year end still involves. Then put the scope, the fee basis and the extras in the engagement letter, as covered in engagement letters for MTD, and give existing clients reasonable notice in line with raising fees with existing clients.

What might a priced example look like?

Illustration only. A firm uses a quarterly fee per business plus a year end fee. A sole trader who keeps her own records in software pays £60 a quarter for review and submission and £400 for the year end, £640 a year. Her neighbour, a landlord with UK and overseas property whose records the firm keeps, has two businesses at £120 a quarter each plus £550 for the year end, £1,510 a year. Both letters list the same extras at the same rate, so the difference is explained by the work.

What mistakes should firms avoid?

  • Pricing per client when the work is per business.
  • Leaving nil updates, resent fourth updates and software reauthorisation out of scope.
  • Offering a fixed fee without defining record quality or transaction volume.
  • Letting a direct debit imply that all work is covered.
  • Absorbing the first year’s double workload without an onboarding charge.

Solar Protect runs fee protection schemes for accountancy and bookkeeping practices. See how our accountant schemes work or read fee protection schemes for accountants.

Related Accountapedia entries

Sources

Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 19 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.