What should accountants charge for MTD quarterly updates?

There is no standard fee for MTD for Income Tax quarterly updates, and no official or professional body benchmark we could find. The defensible approach is to price each client from the extra hours MTD adds, the software you supply and the risk you take on. With around 1,077,000 more sole traders and landlords joining on 6 April 2027, now is the time to set and publish those prices.

Is there a going rate for MTD quarterly updates?

No reliable market rate has been published. Ranges online come mostly from software vendors and accountancy marketing sites, not audited surveys, so treat them with care.

The best primary evidence is HMRC’s own costing. Its impact note for sole traders and landlords, updated 2 September 2025, puts the average cost at £320 one-off and £110 a year per business. The one-off figure includes “additional accountancy or agents’ costs”.

HMRC’s £20,000 threshold impact note of 24 March 2026 goes further. It says customers using an agent “may see increased agent charges, especially where the agent completes the MTD quarterly update.” HMRC’s averages assume many clients send their own updates, so they understate the cost of a fully managed service.

How much extra work does MTD add per client?

Expect more work in year one than later. AAT members interviewed by AAT Comment in May 2025 gave these estimates:

The new tasks are four quarterly updates, query handling each quarter, sign-up and software authorisation, and year-end adjustments before the tax return. Read our guide to the MTD final declaration for the year-end steps.

How do you work out an MTD fee, step by step?

Build each fee from cost and risk, then check it against what the client values.

1. Time one quarter. Log the real hours for a sample of April 2026 clients, including chasing records.
2. Apply your charge-out rate. Use your normal rate, not a discounted “compliance” rate.
3. Add software. Include any licence you buy for the client, at cost or with a margin.
4. Add a risk and queries margin. Quarterly deadlines create more contact points and more chances for error.
5. Add one-off set-up. Charge sign-up, software connection and training separately in year one.
6. Compare with value. Our guide to value-based pricing explains how to test the result.

Worked example (illustrative figures only)

A landlord with good spreadsheet records takes 45 minutes a quarter at a £70 hourly rate, so £52.50 a quarter or £210 a year. Bridging software at £5 a month adds £60. A 15% queries margin on the time (£31.50) takes the annual MTD element to £301.50, before the year-end return. These numbers are assumptions to show the method, not market data.

Which pricing tiers work for MTD clients?

Tiering lets the client choose how much they do themselves. Firms quoted by AAT Comment use options like these.

• Review only: the client keeps records and submits updates; you check them and file the tax return as main agent.
• Agent submits: the client keeps digital records; you review and submit each quarterly update.
• Full service: you do the bookkeeping, submit updates and file the return.

HMRC’s agent rules shape the tiers. A client can have one main agent and any number of supporting agents. Only the main agent can submit the tax return, view the tax calculation or adjust payments on account. If a bookkeeper submits quarterly updates as a supporting agent, price your main agent work to match.

Monthly fee or per quarter?

A monthly fee smooths cash flow for you and the client, and many firms bundle MTD into a fixed monthly package. Per-quarter billing ties the fee to each deadline, which suits clients who pay only when work is done. Our fixed fee vs hourly vs value comparison covers the trade-offs.

Whichever you choose, set out the scope in writing. HMRC’s agent toolkit, updated 2 November 2026, notes that professional bodies encourage letters of engagement that “clearly define roles and responsibilities”. See our MTD engagement letters guide.

Which clients need which approach?

Use a quick decision list for the April 2027 group.

• If records are already digital and clean, offer the review-only or agent-submits tier.
• If the client uses paper or a shoebox, price full service, or a one-off fee to move them to digital records first.
• If income sits just over £30,000, check whether it may fall below the threshold. Our MTD £30,000 threshold guide explains the test.
• If the fee cannot cover the work, consider whether to keep the client. Some AAT members said they expect to lose clients.

What advisers should do now

• Time a sample of April 2026 clients’ quarterly updates before setting April 2027 prices.
• Write to each April 2027 client with tier options and the new fee before January.
• Agree who is main agent and who is supporting agent for each client.
• Remind clients that agent and software fees for the business are tax deductible.

Frequently asked questions

How much do accountants charge for MTD quarterly updates?

There is no official benchmark. Price from the hours each quarter takes, your charge-out rate, software and a risk margin, then offer tiers.

What does HMRC say MTD costs a business?

HMRC’s September 2025 impact note estimates an average of £320 one-off and £110 a year per business, including some agent costs.

Should I charge a one-off fee for MTD sign-up?

Many firms do. Sign-up, software connection and client training happen once, so a separate set-up fee keeps the ongoing price clear.

Can a bookkeeper submit quarterly updates while I file the return?

Yes. The bookkeeper can act as a supporting agent and submit quarterly updates, while you act as main agent and submit the tax return.

Are MTD fees tax deductible for my clients?

Yes. HMRC’s impact note says software and agent costs for business purposes are tax deductible.