How much does Making Tax Digital cost?

MTD for Income Tax is based on qualifying income, which is your total self-employment and UK property turnover before expenses, not your profit.

• 6 April 2026: qualifying income over £50,000
• 6 April 2027: qualifying income over £30,000
• 6 April 2028: qualifying income over £20,000

If you are in one of these groups, you will need compatible software and will be sending HMRC four quarterly updates a year plus a Final Declaration.

Every MTD bill is made of the same three parts. Most tradespeople pay for two of them.

• Software: needed by everyone, free to around £20 a month
• Accountant fees: optional, but most trades already use one
• Your time: the cost nobody puts on the invoice

You cannot send quarterly updates through the old Self Assessment website, so you need software that works with MTD. HMRC does not make its own. Free and paid options come from commercial providers on HMRC's list of compatible software.

• Free tiers: £0. Fine for one simple income source, but usually no bank feeds and limited help.
• Basic paid plans: about £5 to £10 a month, £60 to £120 a year.
• Full accounting plans: about £12 to £33 a month, £144 to £400 a year, often with introductory discounts.

If you already pay for cloud accounting, check whether MTD for Income Tax is included before you buy anything new. The biggest jump in cost is for people moving from paper or spreadsheets.

If your accountant handles MTD, they now touch your figures five times a year instead of once. UK practices are commonly quoting £75 to £150 per quarterly update, with some tradespeople reporting quotes of £150 plus VAT per return.

• Quarterly updates: 4 x £75 to £150 = £300 to £600
• Final Declaration: around £150 to £300
• Typical yearly total: £450 to £800, more for complex cases

Most sole traders paid £200 to £400 a year for a basic Self Assessment return before MTD, so expect your accountant's bill to rise by a few hundred pounds. Clean, up to date records are the easiest way to keep it down, because accountants charge for tidying up.

• Signing up for MTD with HMRC: free
• Choosing and setting up software: free if you do it, £50 to £150 if your accountant does
• Entering opening figures or importing old records: an hour or two of your time
• Learning the software: most providers include free guides

These costs only hit in your first year.

For a tradesperson, time spent on admin is time not spent earning. If your records are kept up as you go, a quarterly update takes about 1 to 3 hours. If you leave it to the deadline and dig through receipts and texts, it can take a full day each quarter.

At a £40 an hour day rate, 8 hours of catch-up a quarter is £1,280 a year in lost earnings, which is more than most software and accountant fees combined.

• Do it yourself, free software, records kept up: £0 cash, about 4 to 12 hours a year
• Do it yourself, paid software: £60 to £400 a year, about 4 to 12 hours a year
• Software plus accountant: £510 to £1,200 a year, about 2 to 6 hours a year of your time

These are estimates for a straightforward sole trader. Get a written quote from your accountant before you decide.

• Record jobs, invoices and expenses the same day, not at the deadline
• Photograph receipts as you get them
• Use one tool for quotes, invoices and payments so the records are already digital
• Ask your accountant for a fixed yearly MTD price, not per return
• Check your existing software plan before paying for a new one

Fixxa is built with Making Tax Digital in mind. You talk or message on WhatsApp, Fixxa builds the quote or invoice, and Fixxa Pay sends faster payment links. Every job becomes a clean digital record you or your accountant can use for quarterly updates, which cuts the time and tidy-up costs above. Fixxa is £19.99 a month or £190 a year, with a 14 day free trial and no card needed. Direct quarterly submissions to HMRC are on the Fixxa roadmap.