Pricing for MTD: How to charge more, and prove it’s worth it

Making Tax Digital (MTD) for Income Tax is forcing a pricing reset across the profession.

You’re being asked to do more work, and more often, with tighter deadlines.

Meanwhile, your clients still expect fees that were set for a once-a-year service.

In this article, we explore how MTD for Income Tax pricing needs to change in response, looking at why traditional annual fee models no longer hold up, and how you can rethink pricing in a way that’s fair to clients and sustainable for your practice.

Here’s what we discuss:

Why MTD has made pricing unavoidable

For years, income tax pricing has been built around an annual event.

Records came in, work ramped up, returns were filed, and fees followed a familiar rhythm.

We don’t need to remind you that MTD changes that completely. You’re now expected to engage with client data throughout the year and submit updates at least every quarter (although more frequent is better!).

More than this, quarterly updates mean you must maintain a high standard for record quality on an ongoing basis.

That shift has exposed a growing gap between the work being delivered and the fees many practices are charging.

You might already feel this in your practice, with capacity feeling tighter, deadlines arriving all the more frequently, and teams managing multiple submission windows rather than one intense period of work.

At the same time, clients see tax as something that happens once a year.

Avoiding a pricing conversation doesn’t make this easier. It simply pushes the pressure onto your people and your margins.

Understanding what quarterly updates actually involve

Quarterly updates aren’t a full tax return but, in the same breath, they aren’t a light touch exercise.

Each submission still requires records to be acquired, then reviewed. Figures need to be sense-checked and errors to be corrected before anything is filed.

When you multiply that effort across dozens or hundreds of clients, the time commitment becomes significant very quickly.

It might not be just the quantity of work that’s problematic. Even if each update takes a relatively small amount of time, completing them all within fixed submission windows places real strain on systems and staff.

And that’s before you factor in chasing missing information, answering client questions, or dealing with poor quality records.

Some firms have questioned whether it’s acceptable to take a relaxed approach during HMRC’s penalty grace period. This means HMRC will not penalise late quarterly updates in the first year.

This is not a solution. Quarterly updates remain a legal requirement, and knowingly failing to comply can breach your professional conduct rules (PCRT) as laid down by your membership organisation. Submitting figures you know aren’t accurate, or skipping updates altogether, not only puts your practice and job at risk. It undermines trust.

MTD requires proper processes and consistent delivery, and pricing needs to reflect that reality.

Why annual pricing no longer reflects the service you provide

When fees are tied to the annual tax return, much of the work you will do under MTD goes unseen and unpaid.

The effort is spread across the year, but income often isn’t, which creates pressure on cash flow and limits your ability to invest in people and technology.

There’s also a visibility issue. Clients see the final tax return but, depending on their service level, might not see the repeated work that happens behind the scenes throughout the year.

They don’t understand that five or ten phone calls chasing them for paperwork every three months is a drain on your resources—and therefore your bottom line. They only see the fact the quarterly update is completed.

Without context like this, price increases can feel sudden or unjustified from their perspective. But it’s very hard to explain and it’s where many pricing conversations stall.

You feel underpaid for the work involved, and clients feel surprised or frustrated by higher fees.

Moving away from annual pricing and towards a model that reflects ongoing service helps close that gap.

AI changes the economics of MTD work

AI is now a practical part of modern accountancy, particularly when it comes to handling the volume and frequency of MTD submissions.

And with MTD, it’s simply the only way forward.

AI reduces manual processing, improves record quality, and helps ensure updates are accurate and on time.

Sage’s MTD AI Agent is part of Sage for Accounting, and is designed to handle repetitive groundwork at scale. It can automatically segment clients based on complexity, set up tasks and reminders, chase documents, and flag potential issues early. It’s like having an additional member of staff dedicated to MTD.

None of this replaces professional judgement, but it frees your team to focus on review, advice, and client communication.

This has a direct impact on pricing. When routine work is handled efficiently, you can offer clearer packages, predictable fees, and better service without increasing headcount at the same rate as your client base.

It also strengthens your value story. Clients benefit from cleaner data, fewer surprises, and a smoother experience across the year, which makes pricing discussions far easier.

Rethinking MTD for Income Tax pricing

Many practices are moving away from annual fees towards monthly retainers that reflect year-round work. This aligns income with effort and makes costs easier for clients to plan for.

Tiered pricing is another common approach. Packages might be based on transaction volume, business complexity, or the level of support required. Clients who handle more themselves pay less, and those who want full support pay more.

Some firms are bundling advisory touchpoints into their MTD offering. Quarterly updates create natural moments to discuss cash flow, tax estimates, two or three-year projections, and business performance. Including these conversations within your pricing helps clients see clear value beyond compliance.

What matters most is that clients gain a clear understanding. Clients need to understand what’s included, what isn’t, and how their choices affect the fee.

Tools like GoProposal, now part of Sage for Accountants, can help formalise this through clear letters of engagement that set expectations from the start.

The Do It For Me client

Many small business owners are already accustomed to using technology, provided the tools are simple enough and training resources are available.

But as most accountants and bookkeepers know, there’s a stubborn minority of clients who are entirely the opposite.

We can call these Do It For Me clients. They prefer a hands-off approach and want an accountant to handle every aspect, including organising the data and reconciling against bank accounts. Above all else, these clients value the peace of mind that compliance is handled on their behalf.

It might surprise you but this approach is entirely possible for MTD for Income Tax.

An add-on for accountants and bookkeepers to use alongside AutoEntry’s data entry automation, and available within Sage for Accountants, AccountsPrep provides a central platform perfect for handling clients who don’t have or need a full ledger.

Accountants and bookkeepers can take bank statement data as the source of truth, and scan in the data via AutoEntry. They can then quickly use AccountsPrep to sort, categorise and prepare to trial balance without the need for the back and forth to the smallest of clients.

For example, clients need only output three months of bank statement PDFs each quarter for the quarterly update. They can do this using their banking app. Once the accountant or bookkeeper receives these, then reconciling in a way fully compliant with MTD can take minutes.

Together, AutoEntry and AccountsPrep provide a robust, integrated approach to MTD (and Self Assessment), simplifying financial administration and enhancing data accuracy for every one of your sole trader and landlord clients.

Example of MTD pricing tiers you can adapt

It’s one thing to say pricing needs to change, but understanding what that actually looks like in practice is another.

Many firms are now structuring their services in tiers as a way to anchor value properly and make higher levels of support feel justified.

Here’s a practical example you could adapt to your own client base.

Bronze: Compliance only

Designed for confident DIY clients who are comfortable using software and keeping their records up to date.

• Client maintains bookkeeping within agreed software
• You review records quarterly
• You submit quarterly updates
• Basic end of period adjustment
• Email queries only
• Monthly fee from £35 to £50 plus VAT, plus software
• Final year end tax return priced separately

Silver: Compliance plus light support

Suitable for small sole traders or landlords who want more reassurance.

• Bookkeeping support for simple businesses
• Quarterly review and submission
• Basic tax estimate after each quarter
• Limited phone or email support
• Clear turnaround expectations
• Monthly fee from £65 to £85 plus VAT, plus software
• Final digital tax return priced separately

Gold: Compliance plus proactive advisory

Designed for growing sole traders, multiple property owners, or more complex affairs, with a full oversight and forward-planning view.

• Full quarterly bookkeeping
• Quarterly updates submitted
• Quarterly cash flow and profit summary, or even two or three-year projections (tip: Futrli by Sage is ideal for this)
• Tax estimate and planning conversation
• Priority support
• Ongoing advisory input
• Monthly fee from £100 to £150 plus VAT, plus software
• Final digital tax return included or priced at a reduced rate

Why tiers work psychologically

Tiered pricing does two important things:

First, it reframes the conversation from “why are fees going up?” to, “which level of support do you want?”, shifting control to the client while maintaining your boundaries.

Second, it makes mid and higher tiers feel reasonable.

If Bronze looks lean and self-managed, Silver and Gold feel supportive and safer.

Even if you expect most clients to choose the middle option, the structure guides that decision.

A few practical tips before you implement tiers

Here’s what to bear in mind:

• Be explicit about software requirements. Limiting bookkeeping platforms reduces chaos and protects your margins. Tip: With Sage for Accountants, you can offer Sage Accounting to clients while receiving a significant RRP discount that grows with the more subscriptions you add to your plan.
• Separate the final tax return clearly so there’s no confusion about scope.
• Review pricing after year one. MTD workflows will evolve and your fees should reflect real experience, not guesswork.
• Don’t underprice quarterlies. Even small per-quarter fees add up quickly across your client base.

Most importantly, align pricing with capacity.

If you don’t have the team to deliver high-touch support at scale, your Gold tier needs to be priced accordingly.

Using MTD to strengthen your service offering

MTD gives you more frequent insight into your clients’ financial position, and that visibility creates opportunities to add value in practical, meaningful ways.

You might offer simple quarterly tax estimates, cash flow snapshots, or management summaries that help clients plan ahead.

These don’t need to be complex advisory projects to make a difference. Even small insights can shift how clients perceive your role.

For some clients, MTD will highlight a need for more support. For others, it may confirm they’re comfortable doing more themselves. Both outcomes are useful. They allow you to segment your client base and focus your time where it has the greatest impact.

Over time, this leads to a more resilient practice with clearer positioning and healthier margins.

Communicating MTD value in a way clients understand

Most clients don’t care about the mechanics of quarterly submissions. They care about outcomes.

When you talk about pricing, focus on what they gain: better visibility of their tax position, fewer unexpected bills, more confidence that they’re meeting their obligations, and less stress at year end.

Be open about why fees are changing. Explain the additional work involved and the systems you’re using to deliver it efficiently. Position MTD as a service you’re managing on their behalf, not an inconvenience you’re passing on.

You are the gateway to HMRC for clients, and you’re helping clients comply with an HMRC requirement.

Starting these conversations early gives clients time to adjust and reduces friction later.

Managing price increases with existing clients

Price increases are easier to handle when they’re planned rather than reactive.

Ideally, you introduce new pricing structures before clients are mandated into MTD, with a clear explanation of how the service is changing.

“Early bird offers” that are discounted slightly from your usual rate for 12 months will boost sign-up rates and minimise any client urge to shop around (although you should highlight that, because you already manage their accounting data and know it well, your practice can make the transition to MTD as seamless as it can be).

Some practices phase increases over the first year, while others introduce new packages and allow clients to choose their level of support. There’s no single right approach, but consistency and transparency matter.

When clients push back, return to the service you’re providing and the risks you’re managing for them. If a client genuinely doesn’t see the value, that can prompt a useful conversation about fit.

Final thoughts

MTD has accelerated pricing discussions many practices needed to have anyway.

It has changed the nature of Income Tax compliance, and pricing models built around a single annual task no longer reflect the work involved.

With the right structure, the right use of AI, and clear communication, MTD can strengthen your practice rather than strain it. It gives you an opportunity to modernise pricing, improve service quality, and build a more sustainable business.

Handled well, MTD can become more than just a regulatory obligation, and also a key foundation for growth.