MTD for Income Tax: how to add capacity without adding UK headcount
In short: Making Tax Digital for Income Tax started in April 2026 for people with qualifying income over £50,000. The threshold drops to £30,000 in April 2027 and £20,000 in April 2028. Each client moves from one annual return to quarterly updates, which means more bookkeeping, all year. A dedicated offshore bookkeeper can absorb the routine work while your UK team reviews and submits.
What is changing, and when
Under Making Tax Digital (MTD) for Income Tax, sole traders and landlords keep digital records and send HMRC updates through compatible software during the year, instead of a single self-assessment return. HMRC’s eligibility guidance sets out three phases, based on qualifying income from self-employment and property:
| Qualifying income | Tax year it is measured in | Must use MTD from |
|---|---|---|
| Over £50,000 | 2024 to 2025 | 6 April 2026 |
| Over £30,000 | 2025 to 2026 | 6 April 2027 |
| Over £20,000 | 2026 to 2027 | 6 April 2028 |
The first group is already in. The next two are larger, and the clients in them tend to be smaller, less organised and less used to keeping records during the year.
Why this is a capacity problem
For a practice, MTD changes the shape of the work more than the amount of tax expertise needed.
- More touchpoints. A client you dealt with once a year now needs records brought up to date every quarter, plus the year-end finalisation.
- More bookkeeping. Many self-assessment clients have never kept digital records. Someone has to code the transactions, chase the missing receipts and reconcile the bank.
- Less of a January peak, more of a year-round load. The work spreads out, which is healthy, but it no longer fits around a seasonal push.
All of this lands on a profession that is already stretched. In a 2026 global survey of about 500 accountancy leaders, 73% of firms said they were turning away potential clients because they lacked staff.
Work out your own numbers
Before deciding how to resource it, size the job. A simple method:
- Count your sole trader and landlord clients in each income band: over £50,000, £30,000 to £50,000, and £20,000 to £30,000.
- Estimate the bookkeeping time per client per quarter. Be honest about the clients who arrive with a carrier bag of receipts.
- Multiply by four, and add your year-end time.
- Compare the total with the hours your current team has free.
For example, 150 clients at an average of 1.5 hours a quarter is 900 hours a year of quarterly work alone. That is more than half of one full-time person’s productive year, before you count onboarding clients onto software. Your own figures will differ, so use your own time records.
Your options
Hire in the UK
The obvious answer, and the slowest. A UK bookkeeper typically costs a firm £35,000–£45,000 a year once salary, employer NIC, pension and recruitment are included, and good candidates are scarce.
Push the bookkeeping back to clients
Some clients will happily keep their own records in software. Many will not, and poor records create more review work than they save. This works best as a choice you offer alongside a done-for-you service, priced accordingly.
Automate what you can
Bank feeds, receipt capture and coding rules remove a lot of keying. They do not remove the need for someone to check the output, deal with exceptions and chase the client.
Add a dedicated offshore bookkeeper
The routine part of MTD work is exactly the work an experienced offshore bookkeeper does well: transaction coding, bank reconciliations, ledgers and preparing quarterly figures in Xero, QuickBooks, Sage or FreeAgent. They work in your software, as part of your team, on a fixed monthly fee.
How to split the work
A clear division keeps quality and accountability where they belong.
| Offshore bookkeeper prepares | UK team owns |
|---|---|
| Transaction coding and receipt matching | Client relationship and onboarding conversations |
| Bank reconciliations | Review of quarterly figures |
| Chasing missing documents by email | Tax judgement and advice |
| Draft quarterly figures and queries list | Submissions to HMRC |
| Year-end working papers | Final review and sign-off |
Final review, sign-off and HMRC submissions stay with your firm’s qualified professionals.
What it costs
A DigiHyre Dedicated bookkeeper starts at £750 a month, or £9,000 a year, excluding VAT. That includes recruitment, technical vetting, contracts, payroll, monthly check-ins, backup internet and power, and a replacement guarantee. If your MTD pricing recovers even a modest quarterly fee per client, the numbers are worth running. See our pricing for every role.
A timeline that works
- Now: segment your client list by income band and size the workload.
- Three to six months before each April: have extra capacity in place and trained on your process, so you are not onboarding staff and clients at the same time.
- Before the first quarterly deadline: run a full cycle on a handful of clients and fix what breaks.
Firms that sort out capacity before April 2027 can take on MTD clients that other practices have to turn away.
Read more about the dedicated bookkeeper role, or see how to hire an offshore accountant step by step.
If quarterly updates are where the pressure will land, see how we recruit offshore tax assistants who prepare MTD quarterly updates and VAT and MTD accountants, or start with what an offshore bookkeeper costs and our published fees for every role.