The true cost of MTD, and how the latest tech can help you

This year, Making Tax Digital will affect about 864,000 people (source: HMRC) – those who earn more than £50,000 in gross income as a sole trader, landlord, or as a combination of the two.

It’s fair to assume the vast majority are accounting clients.

When they cross this threshold, a conventional Self Assessment tax return no longer applies. Instead, HMRC requires a cycle of quarterly updates, followed by a final year-end declaration.  

As we’ll see later, this work will add up for accountants. So, how severely will MTD impact your firm? And how can tools like IRIS Elements make a difference?

What you’ll discover in this blog

If you’re trying to understand what MTD for Income Tax Self Assessment (MTD for IT) will cost your practice – and what you can do about it – this guide is for you. It covers:

• The true per-client, per-quarter workload and how it might scale beyond sustainability.
• How digital tools, like IRIS Elements, have innovated to automate the MTD for IT compliance workflow.
• What time-saving AI is already live in IRIS Elements – and what’s coming next.

How is MTD a growing burden for your firm?

With MTD for IT, there is a lot to do if you’re an accountant.

For example, there are important administrative steps that need to happen before you can file a single quarterly update. Clients need to be registered for MTD with HMRC. You need to authorise them on your Agent Services Account. Meanwhile, your software must be set up to communicate with HMRC. This is a one-off process that authorises the system to retrieve and submit obligations. Without that in place, no data comes back, and if obligations don’t come through, then you can’t fulfil them. 

That, in a nutshell, is how you start the process. But there’s much more to it than that.

What is the real cost of MTD for your accounting firm?

Knowing how MTD works and quantifying its impact on your firm are two very different things.

It’s time to put this in perspective. Think about the per-client, per-quarter workload. What does that involve?

• Chasing the client for data.
• Reviewing the data.
• Categorising the data.
• Preparing and submitting the update.
• Confirming back to the client that all this has happened.

Conservatively, that’s one to two hours per client per quarter, assuming the data arrives clean. That’s not always a safe assumption; there’s often going to be more work to be done on the information when it arrives.

Next, let’s take that per-client burden and scale it up. If you have 50 MTD for IT clients, that means you will spend 200 to 400 hours a year just on the quarterly submissions. At 100 clients, you’re looking at 800 hours.

This is all before a single final declaration has been started. And in year one especially, that final declaration isn’t going to feel much easier than a conventional Self Assessment tax return.

Communicating the cost

The industry consensus is fees will need to increase by between 15% and 25% to reflect the additional quarterly engagement. In reality, many practices are looking at far steeper increases – about 50% to 75% – with some considering doubling fees altogether.

That may well be justified, but more work needs to be done to properly communicate these changes. Double check:

• How many of your clients know what your new fee structure looks like?
• How many have agreed to it?
• Have you updated your letters of engagement to reflect what is, in effect, a new service line?

Remember, this is just the beginning of the MTD for IT rollout

The MTD thresholds will start to fall soon, which means more clients will need this level of attention.

• Clients with gross income over £30,000 (per their 2025/26 return) must switch from April 2027.
• Clients with gross income over £20,000 (per their 2026/27 return) must switch from April 2028.

Where does your time go with MTD for ITSA?

In a recent survey, 81% of accountants identified MTD as the single biggest operational challenge. Its effect will be felt by firms of every size this year, from large practices to sole practitioners.

Without an automated or at least structured approach, these concerns will become very real, very soon. The core of this problem, for many, will likely be data collection. Here’s why:

• Every quarter will begin with a manual scramble across your entire client list.
• No repeatable process will mean that every quarterly submission is recreated from scratch.

What should take 30 minutes per client will instead take an hour. Multiply that across every client, every quarter, and the numbers stop feeling sustainable.

The effect on your business growth

Your opportunity to grow can likewise take a hit because of MTD for IT. Every hour spent chasing clients for records or formatting data is an hour not spent on advisory work, client relationships, or growing your business.

Your existing relationships are also at stake. Anyone who has managed a practice through tax season knows how quickly quality can slip when you’re stretched. Response times slide, communications drop, and the service that won the client in the first place starts to feel different.

MTD will create those peak periods every single quarter.

The tools available to accountants and clients: IRIS Elements and IRIS bookkeeping software

The good news is that the technology to support MTD is already here, and it’s continuing to develop even greater levels of efficiency. That means you can automate busywork and instead focus on client success and growth.

The question is: which combination of tools is right for your clients and your practice?

Let’s begin with your clients. They need to track finances and easily send that information to you. Bookkeeping software is built to make that process easier.

• For sole traders who need straightforward bookkeeping, IRIS Cashbook can help. It’s bookkeeping software made for sole traders, and it’s available free of charge to share with clients of practices using IRIS Elements or IRIS Accountancy Suite.
• For those clients who need a more complete bookkeeping solution that spans both self-employment and property income, Dext Solo is a powerful solution that’s well worth considering.

How IRIS Elements already has automation and AI to handle MTD

Your team’s focus needs to be where it matters.

Let’s look at how our cloud accounting software, IRIS Elements, now automatically handles much of MTD’s quarterly processes.

Its MTD client list tool is part of this smart way of working. It lets you run a check across your entire client base, filtering by tax year, income threshold, and mandation deadline. Using cumulative self-employment and property income figures, you can identify exactly which clients fall under MTD from April 2026 and which will be affected by the rest of the rollout. If you wish, you can download that list as a CSV or PDF.

Once you enrol your clients, MTD functionality inside IRIS Elements becomes active. When that happens, the software automatically connects to HMRC to retrieve obligations.

To make life easier, everything is colour-coded: blue for “ready to submit”, green for “already filed”. Quarterly updates are submitted directly to HMRC from within the platform.

Meanwhile, our new MTD obligations homepage widget gives you a real-time view across your entire client list, so nothing slips out of sight and out of mind.

The big difference to your MTD workflow in IRIS Elements: AI

Some of the ways we’ll help you work smarter, not harder, is by using leading-edge AI technology.

AI anomaly detection – live now in IRIS Elements

With so much data, you need to be able to spot if there are any glitches in your numbers. In use across more than 8,000 practices, AI anomaly detection compares tax returns across years, flags unusual changes, and highlights anything that might have been missed.

Intelligent tax preparation – coming soon

The next phase in our AI development at time of writing (April 2026) is intelligent tax preparation. This allows you to take PDFs directly – such as P60s, bank statements and dividend vouchers – and import that data into a tax return within minutes. The AI extracts and populates the figures, and you’re presented with a clear review screen where you can approve, adjust or exclude individual items before importing.

The AI virtual assistant – coming soon

Our next step in AI development will be to add a virtual assistant to the Elements homepage. From a single interface, you’ll be able to:

• Ask which clients have upcoming deadlines
• See which clients have sent data that’s ready to import
• Jump directly to the import tool
• Generate and send chasing emails to clients you’re still waiting on.

The system does the legwork. You make the decisions.

KashFlow integration

Later this year, KashFlow will join QuickBooks and Xero, which already connect to IRIS Elements Accounts Production, removing manual data entry and shortening year-end processes.

IRIS Elements will also connect to IRIS Firm Management, giving practices a combined solution for compliance, practice management and billing. This will be followed by expanded API extensions that open the platform to a wider range of third-party integrations and reporting tools.

The bottom line: accountants can thrive with the right digital software

From now, MTD is only going to become a bigger burden. Those that don’t automate will have no choice but to work faster.

But the winners will be those that work smarter. The ones who build the right structure into their accounting workflows will reap the rewards.

It’s worth thinking about automating data collection, standardising your workflow, having real-time visibility across your obligations, and making the most of the AI tools that are available in software such as IRIS Elements.