Can I use a spreadsheet for Making Tax Digital?
You can keep using a spreadsheet under Making Tax Digital for Income Tax - but you'll need bridging software to submit your quarterly updates to HMRC. Here's how it works.
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8/5/20262 min read
Can I use a spreadsheet for Making Tax Digital?
Making Tax Digital for Income Tax (MTD for IT) requires sole traders above certain income thresholds to keep digital records and submit quarterly updates to HMRC using recognised software. A common question is whether this means you have to buy accounting software - or whether a spreadsheet still counts.
The answer is yes, you can use a spreadsheet - but with an important caveat.
The bridging software requirement
HMRC requires that quarterly updates are submitted through MTD-compatible software with a direct digital link to HMRC's systems. A standard Excel or Google Sheets spreadsheet can't connect to HMRC directly, so it can't submit your updates on its own.
The solution is bridging software. This sits between your spreadsheet and HMRC, reading the data from your spreadsheet and submitting it in the format HMRC requires. You keep your records in your spreadsheet as normal - the bridging software handles the submission.
Who does MTD apply to?
MTD for Income Tax is being phased in based on gross income (income before expenses):
• From April 2026 - sole traders and landlords with gross income over £50,000
• From April 2027 - the threshold drops to £30,000
• From April 2028 - anyone with gross income over £20,000
If you're below the current threshold, MTD doesn't affect you yet. But if you're approaching £50,000 in gross income, it's worth getting set up now rather than scrambling when the deadline arrives.
We cover who needs to act and when in more detail in our post on Making Tax Digital for Income Tax.
What does bridging software actually do?
Bridging software works by importing or reading your spreadsheet data - usually your quarterly income and expense totals - and sending it to HMRC in the correct MTD format. Some tools do this by reading a specifically formatted spreadsheet you've set up. Others let you copy and paste your figures into the bridging tool directly.
The digital link requirement means there has to be a direct, unbroken digital connection between your records and the submission - you can't manually type figures from your spreadsheet into a separate submission tool, as that breaks the link.
Is bridging software expensive?
Not necessarily. Several free or low-cost bridging tools are available. Our MTD Software directory includes a comparison of MTD-compatible tools, including bridging options, with pricing and key features.
Is a spreadsheet the right choice for you?
For sole traders with straightforward affairs - consistent income, manageable expenses, no employees - a well-designed spreadsheet and bridging software can be a perfectly workable MTD solution. It keeps costs low and lets you maintain the familiar format you already use.
The main downside is that it requires more manual input than accounting software with bank feeds. If you have a high volume of transactions, or you want your income and expenses to be categorised automatically as they come in, dedicated accounting software is likely to save you time overall.
Our Spreadsheet and Planning Tools directory lists purpose-built sole trader spreadsheets designed with MTD in mind, and our Accounting and Bookkeeping directory covers the main software options if you'd prefer a more automated approach.
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