How Much Does an Accountant Charge for MTD for Income Tax?

The short answer: what MTD for Income Tax costs in 2026

Most sole traders and landlords pay somewhere between £25 and £200 a month for MTD for Income Tax support. Where you land depends on how much of the work you do yourself.

The market splits into three fairly clear bands.

The low end is software-led. You keep your own records, and the provider files the quarterly updates and the final declaration. Human input is limited. This works if your affairs are genuinely simple and you are comfortable with the software.

The middle band is where most independent firms sit. You get a named accountant, bookkeeping review rather than raw data entry, quarterly tax estimates, and someone to call when a bank feed breaks in the middle of a quarter.

The upper end covers heavier bookkeeping, multiple properties, Construction Industry Scheme deductions, VAT registration, or more frequent tax planning through the year.

One caution before you compare numbers. A quote is only meaningful once you know what sits inside it. The cheapest monthly figure is often the one with the most excluded.

Why MTD for Income Tax costs more than a Self Assessment tax return

The number of submissions has gone from one a year to five.

Under Making Tax Digital for Income Tax, you send four quarterly updates by 7 August, 7 November, 7 February and 7 May, then a final declaration. The tax return and payment deadline remains 31 January after the end of the tax year. Quarterly updates do not replace the return, and all four must reach HMRC before the return can be submitted.

That changes the shape of the work. Your accountant is now looking at your figures four times a year rather than once, which is why the old annual fee has largely been replaced by a monthly one.

There is a return on that. Catching a misposted expense in November costs far less than unpicking fourteen months of it the following January. Quarterly review also gives you a running tax estimate, so the January bill stops being a surprise.

What makes the price go up or down

How many income sources do you have?

Self-employment and property are reported as separate quarterly updates, then pulled into one tax return. A sole trader with a rental property has two sets of updates. A landlord with a trade and two jointly owned properties has more again.

How many transactions do you have?

Someone raising two invoices a month is cheaper to look after than a busy tradesperson with daily card spending, supplier bills and subcontractor payments. Volume drives the bookkeeping cost, and bookkeeping is usually the largest part of any MTD fee.

How tidy are your records?

This is the variable most people underestimate. Current, categorised records in Xero or QuickBooks cost far less to manage than a backlog. Under MTD it matters more than it used to, because the work repeats every quarter rather than once a year.

Anything unusual in the year end?

Capital allowances, jointly owned property, foreign property, CIS deductions and VAT registration all add work at the final declaration stage. None of them is exotic, but each one adds time.

What software adds to the cost

HMRC requires digital records and quarterly updates through recognised software. HMRC does not supply that software, so there is always a licence cost somewhere in the picture.

Entry-level plans suitable for a single sole trader or a small property portfolio typically start in the low tens of pounds a month, with fuller plans costing more. Some banks include a licence with a business account.

Two points matter more than the headline price.

First, check the product tier, not just the product name. Recognition for MTD for VAT is a separate listing and does not carry across to MTD for Income Tax. Confirm the specific plan you are considering appears on the GOV.UK list of software compatible with Making Tax Digital for Income Tax.

Second, check the price on the vendor’s own page rather than a comparison article. UK software pricing has moved several times during 2026, and published figures go stale quickly.

The one-off costs people forget

Most people focus on the monthly fee and forget the setup work.

If you are already on a suitable system, the setup is light. If you need a software migration, a chart of accounts rebuild, bank feed connections, opening balances or a backlog cleared, that is a separate job and should be quoted separately.

The same applies if you sign up part way through the tax year. Backdated quarters filed in one block are catch-up work, not a standard monthly service. Ask about it before you sign rather than after.

What we have seen since MTD went live

The most common reason a quote comes in higher than the client expected has nothing to do with the quarterly updates. It is the state of the records.

Someone who has kept a spreadsheet for years and filed one tax return each January has usually never had to categorise expenses as they go. Under MTD that habit has to change from the first quarter, and that first quarter is where the work sits. We now ask to see three months of bank transactions before quoting, because the figure we would have given without looking is rarely the right one.

What happens if you miss a quarterly update

There are no penalties for missing a quarterly update deadline in the 2026 to 2027 tax year. You must still keep digital records, and all four updates must reach HMRC before you can submit your tax return.

From the 2027 to 2028 tax year, points-based penalties apply. Each missed quarterly update or tax return deadline earns one penalty point. At four points HMRC charges £200, and a further £200 for every later missed deadline.

Late payment penalties already apply. In your first year under the new penalties you have 30 days from the due date to pay in full or agree a payment plan, reducing to 15 days afterwards. For the 2026 to 2027 tax year, payment 31 days or more late attracts 3 per cent of the tax owed at day 15, a further 3 per cent at day 30, and 10 per cent a year charged daily from day 31.

An accountant does not remove that exposure. Deadlines still slip when records arrive late. What a monthly fee buys is someone tracking the dates and chasing you before they pass.

How to compare two MTD quotes

Ask every firm the same five questions.

1. Is bookkeeping included, or only reviewed once I have done it?
2. Is the software licence inside the fee, and which plan?
3. Is setup or onboarding charged separately?
4. Are VAT returns included?
5. What happens to the fee if I add a property or start a second trade mid-year?

There is one reliable warning sign. If a firm quotes you a price without asking about your income sources, your transaction volume, or the state of your records, you are not looking at a complete quote.

Can you do MTD for Income Tax yourself?

Yes, and for some people it is the sensible choice. If you own one rental property, run it through a single bank account, and have no capital allowances or joint ownership, a low-cost software licence and a few hours a quarter will cover it.

The case weakens for sole traders. Mixed personal and business spending, mileage, asset purchases and CIS deductions all create decisions that change your tax bill, and you now make those decisions four times a year. If you are already unsure how to treat an expense, five deadlines will not make that easier.