How are members repricing their services to reflect incoming MTD changes?

Accountants anticipate a sharp increase in work following MTD for ITSA. Here they discuss the upcoming administrative burden, effects on clients and resultant pricing.

Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) will become mandatory for thousands of individuals from 6 April 2026 – just under eleven months from now. HMRC says it’s the biggest, “most significant” change to Self Assessment since 1997. In the first phase, it will initially affect landlords and sole traders with a qualifying income over £50,000.

From April 2027, the new system will then apply to landlords and sole traders with qualifying income over £30,000. And from April 2028 the system will apply to those with qualifying income of £20,000.

The changes require digital record keeping using MTD-compatible software and submitting digital quarterly updates to HMRC. Self-employed individuals and company directors within the scope of MTD for ITSA will therefore be required to submit quarterly returns (updates) as well as Final Declarations.

Although these quarterly updates have been designed to distribute the workload more evenly throughout the year and align with real-time reporting, there are concerns it will create more work for accountants and bookkeepers.

The standard deadlines for submitting quarterly updates are as follows:

• First quarterly update: 6 April to 5 July. Deadline to submit – 7 August.
• Second quarterly update: 6 July to 5 October. Deadline to submit – 7 November.
• Third quarterly update: 6 October to 5 January. Deadline to submit – 7 February.
• Fourth quarterly update: 6 January to 5 April. Deadline to submit – 7 May.

Alternatively, businesses can opt to report for calender quarters. The same deadlines apply:

• 1 April to 30 June. Deadline to submit: 7^th August.
• 1 July to 30 September. Deadline to submit: 7^th November.
• 1 October to 31 December. Deadline to submit: 7^th February.
• 1 January to 31 March. Deadline to submit: 7^th May.

These changes will have a huge impact on accountants and the services they provide, and many are considering repricing their services to reflect the extra work.

But how are accountants approaching this? How can they ensure their new pricing structures fairly reflect the additional time and resources needed under the new system while retaining clients?  And how much extra work and time do accountants estimate the new system will create? We spoke to accountants and bookkeepers.

Not sure where to start? Here’s a plan you could follow to prepare for MTD.

Repricing needs to reflect improved services, even if it means losing clients

Stephen Leonard MAAT, Partner, Winders Chartered Accountants

We’re in the early stages of repricing and we’re looking at how we’re going to communicate price increases to clients.

MTD for ITSA is going to create additional work, no doubt about it, but it also brings a chance to reassess our services and the value we bring.

We’re identifying clients who will be affected by each phase of MTD implementation. So rather than sending out generic emails and adopting a blanket approach, we’re going to write personally to everyone, outlining how the changes will affect them. We will also offer the choice for early adoption.

We’ll be clear that these changes will bring an additional cost in percentage terms, which for some clients, is likely to be substantial. We do expect to lose some clients along the way, as some will no longer be able to afford the cost.

We see that as an opportunity to focus on bigger and more engaged clients. Repricing is not just about the extra work, it’s about the extra and improved services we can provide for our clients.

It’s about getting the conversation right and being part of the solution, seeing MTD for ITSA as an opportunity rather than a problem.

In terms of the additional burden MTD for ITSA will create, I envisage the initial sign-up and registration process to be quite messy. There will be a lot of back and forth and various authentication processes.

But what’s clear is that even though we need to submit four updates, it won’t be four times the work, that’s a myth. Ultimately we’re expecting around 20-25% more work once the system becomes more embedded. But in the early years and during the transition period there will be a lot of time and resource pressures. It’s likely to be 30-40%, and in some cases as much as 50% more work while we’re getting clients registered and signed up. 

In terms of compatible software, we use Xero. Some clients may want us to use alternative software, but that creates additional time and resources for us to adjust to it.

Some of the challenges of using compatible software are around staff training. That creates time and resource pressures as well as training fees. 

Eventually, we’re likely to see more self-employed people – who previously did accounts themselves – take on accountants and bookkeepers because of added complexities. But that’s unlikely to happen for a while – there is lots of misinformation about DIY accountancy software, so it will take a while before people will seek advice.

Verdict: This is an opportunity to review and improve our services and repricing needs to reflect that – even if it means losing clients.

Quarterly reporting move is a natural point to ensure commercial viability

Rachael-Ann Harrison MAAT, Chartered Accountant and MD, Chadwick Accountants and Bookkeepers Ltd

Repricing self-assessments is absolutely essential in light of the upcoming MTD rollout. The shift means four times the number of submissions and queries, and in many cases, year-end calculations will now need to be performed quarterly. This represents a significant increase in workload.

That said, I’m viewing this as a real opportunity. Many of our sole trader clients are long-standing legacy clients who are still on outdated, low-fee arrangements. The move to quarterly reporting provides a natural point to reassess and restructure pricing, ensuring these services become commercially viable.

Client retention isn’t a major concern for us, as our value proposition isn’t built on being the cheapest. We focus on delivering excellent service and maximising tax efficiency, and those who appreciate that will stay. If someone is purely price-driven, we’re not the right fit for them.

I recently spoke with a competitor who has taken an interesting approach. She’s proactively converted all her sole trader clients into limited companies, meaning they’re not impacted by the new MTD requirements. It’s certainly a bold strategy.

I do anticipate that more sole traders will start seeking professional support as a result of the changes. What was once a once-a-year inconvenience is becoming a much more frequent obligation, and many will quickly tire of the administrative burden.

Verdict: The move to quarterly reporting provides a natural point to reassess and restructure pricing to ensure commercial viability.

Clients will want us to pick up more MTD work, increasing planning opportunities

Steven Millerchip, Partner, Brearley & Co and Ben Wingate, Partner, Brearley & Co

We are definitely considering repricing our services. I’ve been getting five returns done for the price of one return, unfortunately.

It’s going to create a massive amount of work all at one time. There’s no staggering to it. It’s not like VAT where we have a number of different quarters that we can work to and spread that work out during the year.

We’re approaching this with clients by offering them different options and scenarios for different prices.

• Clients submit it themselves and crack on with it
• They do it all themselves and we check it.
• They could also do most of it and we just do the final bits and submit it.
• They could give us all the information we require every quarter, and we’ll do it all for them.

We’re always wary of valuing ourselves correctly when we bill people. We don’t always get it right – sometimes we give clients a little bit more leeway, and other times the fee structure goes a little in our favour.

There’ll be an awful lot of work in the first year because of the limits. And once we’re at the £20,000 threshold, pretty much every single self-employed person client will be affected, even if it’s just someone who does 10 hours a week.

Generalising a little bit, the younger generation might be OK with the software, but some older people are going to struggle.

Before VAT moved online, clients were more than happy to look after these themselves. When VAT moved onto software, all of a sudden clients very much didn’t want to touch it. They wanted us to pick that up because they’re a bit scared of using that software. We went from maybe seeing a client once a year to a minimum of five times a year, as they wanted us to do all the bookkeeping and all the back returns for them.

I can see this being a very similar scenario.

MTD for ITSA should be seen as an opportunity for clients as well – it’s not all doom and gloom. The costs are obviously going to increase, but increasing contact with your accountant or your tax adviser makes for more planning opportunities for mitigating tax in legitimate manners.

Verdict: Clients will be intimidated by digitisation and want us to pick up more work. As a result, we’ll have more contact with them, increasing planning opportunities.

We’d have to quadruple fees to cover extra costs and admin

Andrew Dunn MAAT, Founder, Valley Accountancy

We are looking at repricing our services. I don’t see a scenario where MTD for ITSA isn’t going to increase costs and time spent. It could be around two to three times the workload, but I suspect it’ll be four times for some clients.

90% of our clients provide us with tax information at the last minute, in January, despite us chasing them from the previous April. We have a lot of sole trader clients who just consistently put it off, so having to meet deadlines every few months is going to be a nightmare.

It may be a case of deciding to no longer work with sole traders because it’s not worth the headache and stress. Currently, we can cover the fees comfortably, but if we had to quadruple fees – which I’m loath to do – to cover the extra workload and last-minute chaos, it’s going to put off a lot of people.

There is a hybrid solution where we can teach them to do their own quarterly returns instead, but the educating and training will take time, and that’s a drain on us.

A lot of our clients could be hit with penalties for filing late, especially now they have quarterly deadlines to meet. Maybe it could benefit them – it’ll motivate them to become more organised and better at admin.

I am cynical about the benefits of MTD for ITSA; my concern is that it’s going to push entrepreneurs out of the market and hinder growth. I can see a lot of sole traders deciding to just walk away altogether because the admin and cost increases are too much. Some sole traders have businesses which are more like a part-time hobby – evening yoga classes for example. These businesses may earn £20-30k but when the threshold changes and their earnings fall within the scope of MTD for ITSA, they’re likely to be put off and close their business down.

Some sole traders may become limited companies, however. That is what I plan to advise some of my clients – there are tax advantages for limited companies and it’s less complex in some ways.

Verdict: We’d have to quadruple our fees to cover costs and time resources, and I’d rather not do that. 

Annie Makoff is a freelance journalist and editor.