The most reliable way to price quarterly MTD for Income Tax work is to scope each client first, then charge a fixed annual fee (usually billed monthly or per quarter) that reflects how good their records are, how many income sources they have and who does the bookkeeping. Treat the quarterly updates as a new service rather than an add-on to the old tax return fee, and agree it in writing before the first update is due.
MTD for Income Tax has been mandatory since 6 April 2026 for sole traders and landlords with qualifying income over £50,000, and the first quarterly update for 2026/27 is due by 7 August 2026 (see HMRC’s quarterly updates guidance). If you have not yet repriced these clients, there is still time to do it properly. This guide sets out practical ways to approach it.
Why the old pricing model does not fit
An annual Self Assessment fee was built around one deadline and one batch of work. Under MTD for Income Tax, the year now includes four cumulative quarterly updates and then the tax return. Even if the software does much of the submission work, your team will be:
- chasing records four times a year rather than once;
- reviewing categorisation and correcting errors through the year;
- answering more client questions, especially in the first year;
- managing more deadlines across your whole client list.
If the fee stays the same, that extra work is unpaid. Equally, some clients with tidy records in good software may need less time than you fear. Scoping is what tells you which is which.
Scope before you price
Before quoting, gather enough information to place each client in a band. A short questionnaire or a 15 minute call usually covers it.
| Scoping question | Why it affects the fee |
|---|---|
| How many income sources (trades, UK property, foreign property)? | Each business needs its own records and update. |
| Who keeps the records, the client or your practice? | Doing the bookkeeping is a much bigger service than reviewing it. |
| What software are records kept in today? | Moving from paper or unlinked spreadsheets takes set-up time. |
| How many transactions a month, roughly? | Volume drives review and categorisation time. |
| How reliable have their records been in past years? | Late or messy records mean more chasing and correction. |
| Is the property jointly owned? | Shares need to be split correctly in each update. |
| Do they want advice through the year? | Quarterly figures create a natural point for tax planning conversations. |
Pricing approaches that work
Fixed annual fee, billed monthly
A single annual fee covering quarterly updates and the tax return, collected in monthly instalments, is simple for clients to understand and smooths your cash flow. It also removes the temptation for clients to delay contact to avoid a bill.
Per-quarter fee plus a year-end fee
Some practices prefer to charge a set amount for each quarterly update and a separate fee for the tax return. This makes the link between work and fee clear, and suits clients who only want compliance. Make sure the year-end fee still reflects the return itself, including other income, reliefs and claims.
Tiered packages
Packages let clients choose a level of service while keeping your pricing consistent. A three-tier structure might look like this:
- Essentials: client keeps records in compatible software; you review and submit quarterly updates and the tax return.
- Standard: as above, plus you tidy categorisation each quarter and send a short summary of the figures.
- Complete: you keep the digital records for the client, submit everything, and hold a tax planning review before year end.
Price each tier from your own time estimates and target hourly recovery, then adjust for the scoping factors above. Avoid copying fees from elsewhere: your costs, team and clients are not the same as anyone else’s.
Set-up and catch-up fees
Charge separately for one-off work such as moving a client into new software or reconstructing records. If a client signs up part way through the year, HMRC’s digital records guidance says they must catch up their records from the start of the tax year before their first update. That catch-up work should be priced on its own, not absorbed into the ongoing fee.
Protect your margin with clear boundaries
Write down what the fee includes and what it does not. Useful terms to agree include:
- the date each quarter by which records must reach you;
- what happens, and what it costs, if records arrive late or incomplete;
- the number of income sources covered, and the fee for adding another;
- whether ad hoc advice is included or charged separately;
- how and when fees will be reviewed.
Put these in the engagement letter, so there is no confusion when the first deadline comes round.
Communicating the change to clients
Most clients accept a fee change when they understand what has changed for them. Keep the message short and factual:
- Explain that HMRC now requires quarterly updates and digital records, and that this applies to them.
- Describe what you will do each quarter and what you need from them.
- Present the options (packages or fee structure) and the price for each.
- Give a clear deadline to accept, well ahead of 7 August 2026.
- Send a new engagement letter for signature.
Clients who are not yet in scope but are likely to be from April 2027 (qualifying income over £30,000 in 2025/26, per HMRC’s eligibility guidance) are worth contacting early too, so the conversation is not rushed next year.
A quick pricing checklist
- List every client in scope for 2026/27 and those likely to join in 2027/28.
- Scope each one: income sources, record keeping, software, volume, history.
- Decide on your fee structure and tier definitions.
- Estimate time per tier and set fees from your own cost base.
- Quote set-up and catch-up work separately.
- Issue proposals and new engagement letters.
- Review actual time spent after the first two quarters and adjust.
Frequently asked questions
Should MTD for Income Tax be priced per quarter or annually?
Either can work. An annual fee billed monthly is simpler for clients and steadier for cash flow, while a per-quarter fee makes the link to work clearer. The key is that the fee reflects the full year of work.
Should I charge more if a client has several income sources?
Usually, yes. Each sole trade and property business needs its own records and updates, so additional income sources add work and should be reflected in the fee.
What if a client’s records are always late?
Set a records deadline in your engagement letter and agree a charge for late or incomplete records. Review the fee band at the next renewal if the pattern continues.
When should I review my MTD fees?
After the first two quarterly cycles you will have real time data. Compare it with your estimates and adjust fees or tiers at renewal.
How Engager helps
Engager’s value-based pricing tool lets you build consistent fees from the services and options you define, and send them as branded proposals that clients can accept online. Catch-up fees can be quoted alongside the ongoing service.
Once a client accepts, the letter of engagement can be signed with built-in e-signatures, and automated reminders help you collect records before each quarterly deadline.
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