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For MTD for Income Tax clients

A Making Tax Digital engagement letter for quarterly clients

Making Tax Digital turned one deadline a year into five. The engagement letter is where you agree who does what by each of them.

From 6 April 2026, sole traders and landlords whose qualifying income was over £50,000 keep digital records and send HMRC a quarterly update, followed by a year-end tax return through compatible software. The threshold falls to £30,000 from April 2027 and £20,000 from April 2028.

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Making Tax Digital engagement letter

The full letter in Word and PDF for UK practices, with the quarterly timetable, digital records and agent-role clauses.

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Use the free engagement letter generator

Type in your firm, the client, the scope and the fee, and it writes a complete engagement letter for the United Kingdom, ready to print or save as a PDF. Nothing you type is stored.

Next step: send it to the client through FirmHello, where it stays on their record beside everything else they send you.

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The work is no longer a return in January; it is a rhythm. That changes what the letter has to say: when the client sends you data each quarter, who keeps the digital records, which software, and whether you are the client's main agent or one of several supporting agents.

What an MTD letter has to add

Everything a Self Assessment letter says still applies. These five clauses are the ones Making Tax Digital adds.

  1. 1

    The quarterly timetable, with your cut-off

    Updates are due by 7 August, 7 November, 7 February and 7 May, whether the client uses standard or calendar quarters. Name the date each quarter by which you need the client's records, a week or more ahead of HMRC's.

  2. 2

    Who keeps the digital records

    Records must be kept digitally, in compatible software or a spreadsheet connected through bridging software, with the amount, date and category of each transaction. Say whether the client keeps them, you do, or you share the work.

  3. 3

    Main agent or supporting agent

    A client has one main agent, who can file the year-end return, and may have supporting agents, who can prepare quarterly updates but cannot file it. The letter should say which you are.

  4. 4

    The year-end return is still a return

    Quarterly updates are cumulative and are not the end of it. The year-end tax return, due by 31 January, adds income that is not reported quarterly — savings, dividends, partnership profits — and the client must confirm it before you submit.

  5. 5

    How the fee follows the work

    Five submissions and a software licence do not fit a single annual fee invoiced in January. Say whether you charge quarterly or monthly, and who pays for the software.

The Making Tax Digital engagement letter

Written for United Kingdom. The downloads are the same text, as a Word document to edit and a PDF to put on your letterhead.

[Firm letterhead]

[Date]

[Client name]
[Client address]

Dear [Client name],

The engagement

You are required to use Making Tax Digital for Income Tax from [6 April 2026 / 6 April 2027 / 6 April 2028] for your [self-employment / property] income. We will act as your main agent with HM Revenue & Customs and will, for each tax year from [year]: [prepare and submit your quarterly updates from the digital records you keep / keep your digital records and submit your quarterly updates], and prepare and submit your year-end tax return once you have approved it.

The quarterly timetable

Your updates cover the periods ending [5 July, 5 October, 5 January and 5 April / 30 June, 30 September, 31 December and 31 March] and are due to HMRC by 7 August, 7 November, 7 February and 7 May. We need your records for each quarter complete in [software] by [the 20th of the month after the quarter ends]. Records received later may mean the update is sent late.

Digital records

You are responsible for keeping digital records of your income and expenses, each showing the amount, the date and the category, in software compatible with Making Tax Digital, and for keeping them for at least five years after the 31 January filing deadline. [We will provide and administer the software, and our fee includes the licence.]

The year-end tax return

After the end of the tax year we will prepare your tax return, including income that is not reported quarterly, such as savings interest and dividends. We will not submit it until you have confirmed to us that it is correct and complete. It is due by 31 January, which is also when any balancing payment and first payment on account are due.

What is not included

This engagement does not include VAT returns, payroll, partnership returns, 60-day property returns, tax planning, or dealing with any HMRC enquiry or compliance check. We will agree any of these with you separately.

Anti-money laundering

We are required by the Money Laundering Regulations 2017 to verify your identity, and to report to the National Crime Agency if we know or suspect money laundering, which the law may prevent us from telling you about.

Fees

Our fee is [amount] plus VAT per [quarter / month], collected by [direct debit / invoice], covering the quarterly updates and the year-end return. [Software is charged at [amount] per month.] Work outside this scope is charged at [rate] per hour and agreed first.

Your data

We process your personal data in accordance with the UK GDPR and the Data Protection Act 2018, as described in our privacy notice.

Agreement

This letter and our standard terms of business form our contract. Please sign and return a copy.

Yours sincerely,
[Name], [Firm name]

Agreed by [Client name]:

Signature ______________________ Date ____________

Before you use this

Supplied as-is, with no guarantee. These templates are general information, not legal advice, and not a substitute for it. Have your own legal adviser review and adapt one to your practice and your jurisdiction before you put it in front of a client. FirmHello accepts no responsibility or liability for any use made of them.

Where MTD engagements go wrong

Records on the 6th

The client uploads a quarter's receipts the day before HMRC's deadline. A cut-off in the letter turns that from your emergency into their late update.

Two agents, one assumption

A bookkeeper sends the quarterly updates as a supporting agent and each side believes the other is filing the year-end return. Name the main agent.

The annual fee

A fee sized for one return in January now covers five submissions and a software seat. Re-price when the client comes into MTD, not a year later.

Other engagement letters

Self Assessment Self Assessment Bookkeeping Bookkeeping Template and samples Templates

Questions about Making Tax Digital engagement letters

Which clients need an MTD engagement letter now?

Sole traders and landlords whose qualifying income — turnover from self-employment plus gross property income, before expenses — was over £50,000 on their 2024–25 return have been in since 6 April 2026. Those over £30,000 on their 2025–26 return join in April 2027.

Are late quarterly updates penalised?

MTD uses a points system: a point for each missed deadline and a £200 penalty at four points. For 2026–27 HMRC does not give points for late quarterly updates, only for a late tax return. Points for quarterly updates start from 2027–28.

Does the client still file a Self Assessment return?

They file a year-end tax return through MTD software instead, by the same 31 January deadline. HMRC's guidance now calls it the tax return; earlier material called it the final declaration.

Can the client keep records in a spreadsheet?

Only if it is connected to HMRC through bridging software with digital links. Copying figures by hand from a spreadsheet into the software does not meet the rules.

What changed

  • Added an editable Word (.docx) copy of the letter beside the PDF.

The letter is the easy half

Sending it, getting it back signed, and finding it again in two years is the half that eats the week. That is what the portal is for.

No card and no sales call. If you would rather tell us about your firm first, use the longer form.