MTD for Fractional Marketing Directors —
Ad Spend, Performance Fees and Your Threshold
Add every client together. Leave out client ad spend you pay on their behalf and are repaid at cost. Ask your accountant how any such pass-through is recorded.
- Your fees from every client add together. Four retainers of £1,500 a month are £72,000, well above the £50,000 line.
- Client ad spend you pay on their behalf needs care: money passed through at cost is not your fee, but anything you mark up is part of your turnover.
- Performance bonuses, workshops and training days add to your retainers for the threshold test.
A fractional marketing director sits between clients and a long list of third-party costs: ad accounts, agencies, freelancers, tools and events. For Making Tax Digital the question is which of those flows are your income and which are simply money passing through. This guide concentrates on that line, on performance and bonus fees, and on the records that keep a multi-client practice clean.
Are Fractional CMOs and Marketing Leads in MTD?
If you invoice as a sole trader and your gross fees (with any property or other self-employed income) are over the threshold for the relevant tax year, yes. The first line was £50,000, tested on your 2024–25 return:
| Tax Year Tested | Gross Income Over | MTD Start Date |
|---|---|---|
| 2024–25 | £50,000 | 6 April 2026. Live now |
| 2025–26 | £30,000 | 6 April 2027 |
| 2026–27 | £20,000 | 6 April 2028 |
If your clients pay a limited company you own, the company is outside Making Tax Digital for Income Tax and dividends do not count. Fees paid to you personally, and any rental or other self-employed income, still do. See sole trader vs limited company.
Ad Spend and Third-Party Costs: Income or Pass-Through?
Marketing leads often pay for things on a client’s behalf: a Meta or Google ad budget on your card, a freelancer’s invoice, a tool licence. How that is treated depends on how it is invoiced.
| Situation | Usual treatment |
|---|---|
| Client pays the ad platform directly | Not your income or expense |
| You pay the platform and recharge the client at exact cost | May be a pass-through; ask your accountant |
| You pay and recharge with a mark-up or management fee | The invoiced amount is turnover; your cost is an expense |
| A freelancer you engage and invoice on as part of your fee | Turnover, with their fee as an expense |
Performance Fees, Bonuses and Workshops
Many marketing leads earn a base retainer plus a performance element tied to leads, revenue or a campaign result. These are self-employed income and add to your retainers for the threshold, whenever they are paid. Workshops, training days and speaking fees paid gross count too.
- Record performance fees as their own category so you can see how much of your income depends on results.
- Keep the agreement that sets the target and the calculation of the fee.
- Record a late-paid bonus when it is received, not when the campaign ends, if you use cash basis.
What a Fractional Marketing Director Can Claim
| Expense | Notes |
|---|---|
| Marketing software | CRM, analytics, email, SEO and design tools you pay for |
| Freelancers and subcontractors | Designers, copywriters and media buyers you engage |
| Conferences and events | Tickets and travel where they relate to your work |
| Client-site travel | 45p a mile for the first 10,000 miles, then 25p |
| Co-working and home office | Desks, meeting rooms or a flat-rate share of home costs |
| Insurance and memberships | Professional indemnity, CIM or similar bodies |
| Training and accountancy | CPD and your own tax return |
| Update | Period (standard) | Deadline | 2026–27 |
|---|---|---|---|
| Q1 | 6 Apr – 5 Jul 2026 | 7 Aug 2026 | No points if late |
| Q2 | 6 Jul – 5 Oct 2026 | 7 Nov 2026 | No points if late |
| Q3 | 6 Oct 2026 – 5 Jan 2027 | 7 Feb 2027 | No points if late |
| Q4 | 6 Jan – 5 Apr 2027 | 7 May 2027 | No points if late |
The soft landing means no points for late quarterly updates in 2026–27. The points system starts on 6 April 2027, with a £200 fixed penalty at four points. HMRC has also been signing up eligible customers since September 2026, so get ahead of it and register yourself. See the registration guide and the software comparison.
Worked Example
Sara Whitlock, fractional CMO for four businesses
Sara’s clients pay their ad platforms directly, so that £28,000 never touches her accounts. Her software and freelancer costs lower her taxable profit but not the £83,000 total. She has been in MTD since April 2026.
Frequently Asked Questions
Do fractional marketing directors have to use Making Tax Digital?
If you invoice as a sole trader and your gross fees were over £50,000 in 2024–25, yes, from 6 April 2026. Over £30,000 in 2025–26 means April 2027, and over £20,000 in 2026–27 means April 2028.
Does client ad spend count as my income?
Not if the client pays the platform directly. If you pay and recharge at cost it may be a pass-through, but anything you mark up is turnover, so ask your accountant how to record it.
Do performance bonuses count?
Yes. Performance and bonus fees paid to you as a sole trader add to your retainers for the threshold test.
What about freelancers I engage for a client?
If you invoice the client for their work as part of your fee, the full invoiced amount is turnover and what you pay the freelancer is an expense.
I invoice through my own limited company. Am I in MTD?
The company is not in Making Tax Digital for Income Tax, and dividends are not qualifying income. Any separate self-employed or rental income in your own name still counts.
Do I add all my clients together?
Yes. The threshold is tested on your combined fees from every client, not retainer by retainer.
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