200k landlords and sole traders ‘face up to 10%’ cost hike as Making Tax Digital looms
New analysis by TaxCalc finds that more than 200,000 UK businesses currently operating without an accountant risk being hit with sharply higher costs as Making Tax Digital (MTD) rolls out.
Based on a recent survey by TaxCalc to 215 accountancy professionals, the figures estimates that these unrepresented businesses could collectively face “tens of millions” in additional annual accountancy fees if they engage late – driven not by the MTD rules themselves, but by last-minute demand and capacity constraints across the accountancy industry.
Andy North, chief customer officer at TaxCalc comments,
How many unrepresented businesses are heading into MTD this year?
“According to the Director of Making Tax Digital at HMRC, Craig Oglivie, around 850,000 UK businesses will enter Making Tax Digital (MTD) for Income Tax this year.
“Of this cohort, approximately 212,500 businesses, around 25%, are currently unrepresented – meaning they are still managing their tax affairs without an accountant, putting them at a clear disadvantage as MTD deadlines approach.”
Why are unrepresented businesses at greater risk under MTD?
“Unrepresented businesses face MTD at a time when the accountancy sector is already stretched.
“Our latest survey of over 200 accountancy professionals shows that 48% say a lack of capacity is already limiting growth, while ‘too much work’ is cited as the number one cause of stress by 36% of firms.
“This means that businesses that leave MTD preparation until the last minute may struggle to find an accountant willing or available to take them on and, as a result, are far more likely to face higher fees – particularly when firms are asked to onboard them at short notice.”
What are the cost implications for unrepresented businesses in the lead up to MTD deadlines?
“According to our latest survey of accountancy professionals, nearly half (47%) say they plan to increase prices for MTD clients.
“That means for a typical small business currently paying around £1,500 per year in accountancy fees, a relatively modest 10% increase would add around £150 annually.
“However, for unrepresented businesses that currently pay nothing for accountancy support, engaging an accountant late to meet MTD deadlines could mean jumping from £0 to a much higher-priced service based on our survey findings. These businesses may face an additional 5-10% in accountancy fees – as firms pass on the extra time, capacity and onboarding costs associated with last-minute MTD preparation.
“Scaled across the UK’s 212,500 unrepresented businesses, this could equate to tens of millions in additional accountancy costs annually – simply driven by late engagement with firms, rather than the MTD rules themselves.”
How does late or missed MTD compliance translate into fines and penalties for businesses?
“While penalties are paused during the first year of MTD, any missed quarterly submission deadlines from April 2027 onwards will result in businesses accruing penalty points. Once the penalty threshold is reached, a £200 fine is issued, with a further £200 charge for each subsequent missed deadline until sustained compliance is achieved.
“Looking ahead, when the MTD threshold falls from £50,000 to £30,000 in April 2027, the current proportion of unrepresented businesses (25%) is likely to rise, as more landlords, smaller businesses and sole traders enter the mix.
“This is expected to trigger a much larger wave of last-minute demand for accountancy services throughout 2026 and into 2027, placing sustained pressure on firms and driving costs even higher for businesses that delay engagement.”