Most conversations about Making Tax Digital for Income Tax sit firmly in compliance. Deadlines, software choices, and submission processes are helpful, but firms that treat MTD IT purely as a compliance change might be missing the commercial point.
MTD compliance is, at its core, a huge change in behaviour and mindset for the MTD IT client, and this is driving a pricing conundrum for practices who want to make MTD profitable and commercially sustainable.
Not only does MTD change how often the work happens and how it’s delivered, but it also changes the way you need to structure your services for self assessments. It opens up the question of “what are clients willing to pay?” instead of “how much do I need to charge for this?”.
Handle this well, and MTD for IT could be both commercially sustainable and have real positive benefits for your clients. But, if your pricing doesn’t match the reality of delivery, you’ll quickly erode margin, capacity, and your client’s confidence in your pricing (regardless of how efficient the underlying mechanics are).
The Hidden Profitability Risk in “Just Compliance”
At a minimum, MTD IT work involves professional judgement, review, error detection, and accountability for the accuracy of submissions across multiple touchpoints each year.
Internally, firms need to understand that they are not “just submitting quarterly updates”. They are providing year-round compliance assurance. Treating that work as an administrative add-on, or feeling pressure to soften the commercial impact, undervalues both the effort and the risk.
On the client side, earlier visibility brings fewer surprises, better decision-making conditions, and lower penalty risk. Clients who see MTD support as structured oversight, rather than bureaucracy for its own sake, stand to gain more.
Start With Your Economics, Not the Market
Sustainable pricing starts with the firm, not with competitor-led or benchmarked pricing.
Before setting any MTD fee, you need clarity on your own cost base and capacity. That means understanding what it actually costs to run your practice, including commercial salaries, overheads, and, crucially, the level of profit required to make the business worthwhile.
Capacity matters just as much. No professional practice runs at 100 percent billable time, so you need to know exactly how many hours are available for each professional in your firm.
This data means you can calculate your velocity, your minimum viable rate for sustainable delivery. That is what your pricing should be built on.
Client Behaviour Drives Your Pricing
Not all clients consume professional time equally. Quality of records, timeliness, digital competence, and responsiveness all have a direct impact on your delivery, and in turn, your costs.
Correcting errors, chasing missing data, or cleaning up records all consumes capacity. If that work is not priced explicitly, it's being quietly absorbed by your practice.
Firms that price as though all clients behave the same end up subsidising the most demanding ones, which can be easily avoided by building this behaviour into your pricing tiers.
Value Exists Beyond Filing
At it’s baseline, MTD compliance creates value for your clients by automating the processes they may have been doing manually, giving them better visibility into performance, less ‘lost’ paperwork, and less scrambling at the end of year to collect information.
They no longer have to maintain a manual spreadsheet, or whatever system they had to manage income and costs, and they can now rely on a system to automate the categorisation of this data. However, these upsides might not be immediately obvious to clients, and it’s part of your job to help them understand the benefits.
Beyond baseline compliance, MTD IT creates opportunities to deliver additional value. In-year data allows for earlier tax planning, forecasting, and better financial decisions, all of which can help your clients succeed even further.
You get to decide what services you offer beyond compliance, what does your team have the skills and capacity for? These additional value services might not be for every MTD IT client, but they can bring a healthy profit margin if you price to reflect the value you’re providing, instead of an hourly rate.
Advisory support should never be implied or bundled into baseline compliance by default, or it’ll quickly become invisible and underpriced. Firms that succeed with MTD will be the ones that build additional services into their higher pricing tiers, along with a strong value proposition. This makes it clear what's included for baseline compliance, and what additional value you can bring.
Communicate Change Without Apology
Fee conversations for MTD changes do not need to feel defensive. The most effective communication starts with context. Five required touchpoints instead of one, new software, earlier involvement, and greater oversight are valid reasons for increasing price.
Position your services around the benefits of risk reduction, peace of mind, and financial visibility rather than “compliance support”. It’s also essential to translate annual fees into monthly equivalents that make costs more manageable.
Most importantly, be consistent in the face of objection. Making exceptions can undermine your client’s confidence in your pricing faster than you pushing back ever will. It’s okay to let clients go if they don’t want to pay your minimum fee, it’ll make room for someone who does.
Want the How-To? Catch the webinar replay & pricing resources
MTD works best when it sits on clear commercial foundations, supported by simple structures and practical tools that remove friction from delivery.
In our recent live webinar, we walked through the how-to framework, with examples. Catch the replay here.
And, if you want to take it one practical step further with access to our MTD IT resources, including:
- A minimum velocity calculation spreadsheet to make sure you're covering your real costs
- An MTD for Income Tax pricing calculator to test client pricing against your costs.
- A practitioners guide on pricing MTD, plus client-facing templates, to communicate MTD changes without diminishing your value.
