How to price your MTD services for Making Tax Digital

Published Thursday 11 June 2026

Table of contents

• Why pricing your MTD services matters
• What to include in your MTD service pricing
• 3 pricing models for MTD services
• How to communicate value and address client concerns
• How Xero supports MTD pricing and delivery
• Price your MTD services with confidence
• FAQs on pricing MTD services

Key takeaways

• MTD for Income Tax starts in April 2026 for sole traders and landlords earning over £50,000, with lower thresholds following in 2027 and 2028. Getting your pricing right now sets your practice up for sustainable growth.
• Your MTD fees should account for every element of the service you deliver, from initial software setup and client training through to ongoing quarterly submissions and advisory support
• Fixed fees, tiered packages, and value-based pricing each suit different practice models. Tiered and value-based approaches can help you capture the advisory value that quarterly updates create.
• Clients who understand the outcomes of your MTD services, such as better financial visibility and proactive tax planning, are far more likely to see your fees as an investment rather than a cost

Why pricing your MTD services matters

Making Tax Digital is reshaping how practices deliver compliance work, and the scope is expanding. MTD for Income Tax mandates quarterly updates and a Final Declaration for sole traders and landlords, replacing the single annual return with five submissions per year. The rollout begins in April 2026 for those with qualifying income over £50,000, extends to incomes over £30,000 from April 2027, and reaches the £20,000 threshold from April 2028.

Each client affected by MTD for Income Tax will need digital record-keeping, quarterly reporting, and year-end filing, representing a significant increase in workload. If your pricing doesn't reflect this, you risk absorbing the additional effort without fair compensation.

Quarterly updates create natural touchpoints for advisory conversations, and clients who receive regular financial insights tend to see more value in the relationship. Pricing MTD services properly positions your practice to profit from the shift towards ongoing, data-driven advisory work.

What to include in your MTD service pricing

Before setting a fee, map out every component of the service you're delivering. It's easy to undercharge when you haven't accounted for the full scope of work that MTD compliance involves.

Consider including the following in your pricing calculations:

• Initial client setup: Onboarding clients onto MTD-compatible software, configuring their accounts, connecting bank feeds, and ensuring digital records meet HMRC requirements
• Ongoing compliance work: Preparing and submitting quarterly updates and the Final Declaration, replacing what was previously a single annual return
• Client training and support: Helping clients understand their responsibilities under MTD, navigate new software, and maintain accurate digital records between submissions
• Software subscription costs: Factor in any software licences you're covering or recommending, including tools for bookkeeping, tax filing, and practice management
• Workflow adjustments: Time spent updating internal processes, training your own team, and adapting your practice systems to handle higher submission volumes efficiently
• Advisory capacity: The time you'll spend reviewing quarterly data with clients, identifying trends, and providing proactive financial guidance

Share this breakdown with clients too. When they can see the breadth of work involved, they're better placed to understand why fees may differ from what they've paid in the past. You might also consider charging separately for elements like training sessions or advisory reviews, giving clients flexibility while ensuring you're paid for every service you deliver.

3 pricing models for MTD services

There's no single right way to price MTD services. The best model depends on your practice size, client mix, and how much advisory work you want to build into your offering. Here are three approaches to consider.

1. Fixed fees

Fixed pricing gives both you and your clients certainty. You set a single fee for a defined scope of work, calculated from your delivery costs plus a target margin.

To set a fixed fee, total up staff time, software costs, and any other resources needed to deliver the service, then add your profit margin. This approach makes revenue predictable and is straightforward to explain to clients.

The trade-off is flexibility. If a client's needs turn out to be more complex than expected, or if the scope of MTD requirements changes, you may find yourself doing more work for the same fee. Review fixed prices regularly to make sure they still reflect the actual effort involved.

2. Tiered packages

Tiered pricing lets you meet different clients at different levels of need. Some may only want you to handle their MTD submissions, while others want full bookkeeping, compliance, and advisory support bundled together.

A common structure might look like this:

• Essential: MTD software setup, digital record configuration, and all quarterly updates plus the Final Declaration
• Standard: Everything in Essential, plus ongoing bookkeeping, bank reconciliation, and regular compliance check-ins
• Premium: Everything in Standard, plus client training, advisory reviews at each quarterly update, tax planning support, and app recommendations to streamline their workflows

Packages guarantee a baseline of income per client and encourage clients to opt for broader services. Tailor the tiers to your client base; the specific services you include should reflect what your clients actually need and value.

3. Value-based pricing

Value-based pricing shifts the conversation from what the service costs you to deliver, to what it's worth to the client. This works particularly well for advisory-led practices where the outcomes you create, such as better cash flow visibility, reduced tax liabilities, or fewer compliance surprises, carry real financial weight for clients.

Quarterly updates under MTD create a natural rhythm for advisory conversations. Each submission cycle gives you fresh data to review with clients, spot trends, and offer forward-looking guidance. That ongoing insight is often far more valuable to a client than the compliance submission itself.

To make value-based pricing work, you'll need to understand each client's priorities. What keeps them up at night? Where have your services previously saved them money or time? Use those outcomes to anchor your pricing, and communicate clearly how your advisory input connects to their results.

How to communicate value and address client concerns

Even the best pricing model falls flat if clients don't understand what they're paying for. Clear, proactive communication is essential when introducing or adjusting MTD service fees.

Explain why fees are changing. Be transparent about the additional compliance requirements MTD introduces. Clients may not realise that one annual return has become five separate submissions, each requiring accurate digital records. When they understand the scope, the pricing makes more sense.

Frame fees as an investment, not a cost. Help clients see the return. With quarterly reporting, they'll have a clearer picture of their finances throughout the year, enabling better decision-making and reducing the risk of unexpected tax bills. Demonstrating how your services lead to tangible financial outcomes turns a fee conversation into a value conversation.

Use quarterly updates as advisory touchpoints. Each submission cycle is a chance to review financial data, flag trends, and offer guidance. Position these touchpoints as part of the service, not an add-on. Clients who receive regular insights are more likely to see their accountant or bookkeeper as a trusted advisor rather than a compliance necessity.

Communicate early and offer options. Give clients plenty of notice before pricing changes take effect. Offering tiered packages means clients can choose a service level that fits their budget, which reduces pushback and makes the conversation easier.

If a client questions the cost, consider sharing a brief summary of the outcomes you've delivered, such as time saved, compliance issues avoided, or tax savings identified. Concrete results are more persuasive than general assurances.

How Xero supports MTD pricing and delivery

The right software can make a meaningful difference to how efficiently you deliver MTD services, and that efficiency feeds directly into your pricing and profitability.

Xero accounting software is MTD-compatible and HMRC-recognised, supporting both MTD for VAT and MTD for Income Tax submissions. Automatic bank feeds pull in client transactions without manual uploads, and the bank reconciliation feature suggests matches for statement lines, reducing the time spent on routine bookkeeping.

One of the practical advantages for pricing is how data flows through the platform. Bookkeeping data connects directly to client tax returns, whether that's VAT, MTD for Income Tax, or non-MTD self assessment. There's no need to re-enter information across separate systems, which cuts down on duplicated effort and the errors that come with it.

Customisable dashboards give you quick access to client data on cash flow, invoicing, and key financial metrics. This makes it easier to prepare for those quarterly advisory conversations and demonstrate tangible value to clients, which supports both value-based and tiered pricing approaches.

For practice management, Xero's tools for accountants include Xero Practice Manager for tracking jobs, time, and capacity, and Xero HQ for managing your full client portfolio from one place. These are available at Silver tier and above in the Xero Partner Programme, helping you manage higher submission volumes without proportionally increasing headcount.

Xero's MTD features are scalable. Whether you're managing 10 clients or 1,000, you can onboard them onto the same processes and platform, standardising your compliance approach and simplifying how you price and deliver services.

Price your MTD services with confidence

Getting your MTD pricing right is the foundation for a more profitable and resilient practice. With the right model, clear communication, and efficient tools, you can handle growing compliance demands and capture the advisory value your clients need.

Join the partner programme to access MTD-compatible software, practice management tools, and support designed to help you price and deliver your services effectively.

FAQs on pricing MTD services

Here are some frequently asked questions about pricing MTD services for your practice.

How much should I charge for MTD services?

There's no standard rate, as fees depend on the complexity of each client's affairs, the services included, and your practice overheads. As a starting point, calculate the time and resources each element of the service requires, from setup through to quarterly submissions, and build your margin on top. Review your fees at least annually to ensure they keep pace with any changes in scope or legislation.

Should I charge separately for MTD setup and ongoing compliance?

Separating setup from ongoing fees can work well, particularly for clients who need significant onboarding support. A one-off setup fee covers the initial configuration, software training, and digital record migration, while a recurring fee covers quarterly submissions, advisory, and ongoing support. This approach also makes it easier to bring on new clients mid-year without discounting the setup work involved.

How do quarterly updates affect my pricing?

Quarterly updates increase the number of touchpoints per client from one annual return to five submissions. This means more preparation, review, and filing throughout the year. Factor this increased cadence into your recurring fees, and consider whether each quarterly cycle also includes an advisory review, as this adds value for the client and justifies a higher fee.

What if clients push back on higher MTD fees?

Start by helping clients understand what's changed. Many don't realise how much additional work MTD introduces for their accountant or bookkeeper. Share a clear breakdown of what's included in your service, and highlight the benefits they receive, such as up-to-date financial data, fewer year-end surprises, and proactive tax planning. Offering tiered packages also gives price-sensitive clients an option that fits their budget without undervaluing your time.

Do I need to adjust my pricing when MTD thresholds change?

Yes, it's worth reviewing your pricing as each new income threshold comes into effect. The April 2026 mandate covers qualifying income over £50,000, dropping to £30,000 in April 2027 and £20,000 in April 2028. Each threshold expansion is likely to bring in clients with different levels of complexity. Reviewing your pricing ahead of each change ensures your fees remain fair and sustainable as your MTD client base grows.