Making Tax Digital for accountants: running a practice through MTD for Income Tax

What actually changes in the work

Under Self Assessment, most of your contact with a sole trader or landlord happens once a year, usually late. Under MTD for Income Tax, the client keeps digital records in compatible software and sends HMRC a quarterly update of income and expenses, then the tax return after the year end. The return is still due by 31 January after the tax year, but it can only be submitted once the quarterly updates are in.

The updates are cumulative from the start of the tax year, and the deadlines land on the same four days for every client using standard periods. Clients can elect calendar periods (1 April to the end of the month) instead, with the same deadlines.

HMRC has eased the first year: during 2026-27 it will not apply penalty points for late quarterly updates. Late-return penalties still apply. From 2027-28, quarterly updates fall under the points-based penalty regime. The practical reading is that 2026-27 is the year to build the process while a missed quarter costs nothing but rework.

One more date matters for your client list. GOV.UK says that from September 2026 HMRC will start to sign up anyone who needs to use MTD for Income Tax for 2026-27 and has not signed up. A client enrolled that way still needs software, records and an agreed fee. Better that the sign-up happens on your timetable than on HMRC’s.

Get the agent side right first

MTD for Income Tax runs through the agent services account, which is separate from the older HMRC online services for agents. Three jobs, in this order:

1. Check carried-over authorisations. Existing Self Assessment authorisations should appear in the agent services account as main agent authorisations. HMRC asks agents to check that each one is there and to add any that are missing.
2. Invite new clients through the account. For a client you were not previously authorised for, you request authorisation from inside the agent services account, choosing main agent or supporting agent.
3. Agree roles where two firms are involved. A client can have one main agent and any number of supporting agents. Only the main agent can submit the tax return. Where a bookkeeper prepares quarterly updates and you file the return, put who does what in writing in both engagement letters, because HMRC expects one combined position for the return after adjustments.

Sign-up itself asks for the client’s name, date of birth and National Insurance number, plus details of each business or property income source. Collect those during onboarding so sign-up is quick, not a chase.

Segment the client list before you price anything

MTD hits clients very differently, and treating the list as one cohort is how firms end up doing the same quarterly work for very different fees. Cut it five ways:

Capacity: the year now has four more peaks

Every client on standard periods has a deadline on 7 August, 7 November, 7 February and 7 May. February is the problem: the third quarterly update lands a week after the 31 January return deadline, when the team is at its most tired. Plan for it now.

A workable method: for each segment, estimate the time per quarterly update (review only, light bookkeeping, full bookkeeping), multiply by the clients in it, and lay the result over your existing calendar month by month. Where a month overloads, you have three levers: move clients who keep their own records to submitting earlier in the window, offer calendar periods only where it genuinely helps the client, or decline the most labour-intensive record-keeping work. Track hours per update from the first quarter so the second wave in April 2027 is priced on evidence. If you already measure capacity and recovery, our accounting firm KPIs guide covers the measures worth adding.

Your practice management system needs four recurring jobs a year per MTD client plus the return. Whatever you run (Engager, BrightManager, IRIS Elements, Capium, Pixie or Glide among them), set up the recurring job templates and due dates before the next quarter rather than adding them by hand.

Software readiness, client by client

HMRC does not supply MTD software. It publishes a software finder listing products that meet its requirements on their own or together with other software, and it tells agents to check with the provider that a product meets their and their client’s needs. There are two broad shapes: software that keeps the digital records itself, and bridging software that connects existing records, such as a spreadsheet, to HMRC.

For the practice, the decision is less about which product and more about how many. Every ledger your clients use is one more workflow to learn, review and support four times a year. Most firms pick a small set they will support properly (for many, that means ledgers such as Xero, QuickBooks or Sage on the client side, a capture tool such as Dext, and tax software such as TaxCalc or IRIS Elements in the firm) and decide in advance what happens to clients who want something else. Before relying on any of them, confirm on HMRC’s finder that the product covers the client’s income types and the parts of the process you need. Our UK small-firm tech stack guide shows what firms at each stage typically run.

Pricing the extra work: a method, not a number

We will not publish a fee for MTD work; there is no reliable, sourced UK benchmark yet, and your costs are your own. The method that holds up is the one firms used for every compliance change before it:

1. Cost it per segment. Time per quarterly update multiplied by four, plus the year-end return, plus onboarding and sign-up in year one, at your realistic cost per hour.
2. Separate the one-off from the recurring. Software set-up, sign-up and training the client are one-off; quarterly review is recurring. Price them separately so the first year does not set an expectation for the second.
3. Price the value, not just the hours. Quarterly figures give the client an earlier view of their tax bill. If you turn each update into a short tax estimate, that is a service, not a submission.
4. Decide who keeps the records. Client-kept and firm-kept records are different services and need different fees.
5. Put it in the engagement letter. Scope the quarterly updates, the deadline for the client to provide records, and what happens when they miss it. Proposal tools such as GoProposal or Ignition make tiered options easier to present, but the scoping decision is yours.

Set your own fees from your costs, capacity, market and the value to the client. For the conversation itself, see how to raise prices at an accounting firm and the case for and against publishing your prices.

Talking to clients

Clients hear about MTD from HMRC letters, banks and software vendors, often in that order. Get there first with a sequence rather than one email:

• Who: tell each client, by name, whether and when MTD applies to them, based on the return that decides it.
• What changes for them: digital records, four updates a year, and what they must send you by when.
• What you will do: sign-up, software, and the service level you are offering.
• What it costs: the new fee or package, in writing, before the first quarter is due.

Clients in the 2027 and 2028 waves benefit most from an early letter: they can move onto software a year early and arrive with clean records. Keep MTD dates in your firm-wide calendar alongside the rest; our compliance deadlines calendar for 2026-27 lists the regulatory dates landing on UK, US and Australian firms.

What is still open

As at October 2026, we could not find a confirmed start date for partnerships on GOV.UK, and HMRC continues to update its guidance as the first year runs. Treat anything in this guide about scope beyond sole traders and landlords as unconfirmed, and check GOV.UK before advising a client whose position is unusual.