123 Sheets

123 Sheets is HMRC-recognised bridging software that lets you keep your existing spreadsheet and use it to submit Making Tax Digital for Income Tax updates straight to HMRC. Plans start from £19.75 for your first year, per taxpayer.

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At a glance

123 Sheets is bridging software: rather than replacing your spreadsheet, it sits on top of it, pulling your figures into the format HMRC needs and submitting quarterly updates and your final declaration directly. It’s aimed at sole traders who already track their income and expenses in a spreadsheet and don’t want to switch to a full accounting package.

£19.75/yr

50%

First-year price

First year discount

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What is 123 Sheets?

123 Sheets is UK bridging software built specifically for Making Tax Digital. Rather than asking you to move your bookkeeping into a new system, it connects to a spreadsheet (its own templates, or in some cases your existing one) and uses that data to generate and submit MTD for Income Tax quarterly updates and your final declaration to HMRC. It’s a good fit for sole traders who are comfortable working in a spreadsheet and want to meet MTD requirements without paying for a full accounting platform.

Is 123 Sheets HMRC-recognised?

Yes. 123 Sheets appears on HMRC’s official list of software recognised for Making Tax Digital for Income Tax as bridging software. It’s worth checking HMRC’s live software finder before committing for a full tax year, as recognition status and product names can change.

How does 123 Sheets handle MTD for Income Tax?

Spreadsheet-based digital records: you keep tracking income and expenses in a spreadsheet, using 123 Sheets’ templates or a compatible format
Quarterly updates: 123 Sheets pulls the relevant totals from your spreadsheet and submits each quarterly update directly to HMRC
Final declaration: at year end, 123 Sheets helps you bring together the four quarterly updates and any other income or reliefs to submit your final declaration by 31 January
Digital links: because HMRC requires an unbroken digital link from your records to your submission, 123 Sheets is built to avoid manual copy-and-paste breaking that chain

Key features

HMRC-recognised bridging software built specifically around MTD for Income Tax
Works with spreadsheet-based record keeping rather than requiring a full accounting system switch
Templates designed to keep the digital link between your records and your HMRC submission intact
Straightforward quarterly update and final declaration submission process
Lower cost than most full accounting platforms, since you’re paying for the bridge rather than a complete bookkeeping suite

Pricing

123 Sheets has two ways in, depending on whether you use your own spreadsheet or theirs.

Bring your own spreadsheet - £19.75 for your first year

The cheapest way in, per taxpayer:

Add 123 Sheets’ worksheet to your existing spreadsheet
Includes a 50% first-year discount - renewal pricing isn’t published, so confirm before your second year
Covers multiple self-employments and property lets per taxpayer

Use 123 Sheets’ own spreadsheet - add £40 (plus VAT)

For anyone who’d rather not build their own:

A ready-made bookkeeping spreadsheet, pre-matched to HMRC’s income and expense categories
Runs ledger reports and handles disallowable expenditure automatically
One-off cost on top of your annual licence

Higher tiers may be available for sole traders with more complex needs, such as multiple businesses or property income. Always check 123 Sheets’ current pricing page before signing up, as this is a fast-moving space.

Pros and cons

Pros:

Lets you keep your existing spreadsheet-based bookkeeping rather than switching to a new system
HMRC-recognised specifically for MTD for Income Tax bridging
Generally cheaper than full accounting platforms, since it’s built to do one job well
Straightforward for sole traders who are already comfortable and organised working in spreadsheets

Cons:

You’re still doing the underlying bookkeeping manually in a spreadsheet, rather than benefiting from bank feeds or automation
Renewal pricing after the first year isn’t always clearly advertised, so it’s worth confirming before signing up
Less suited to sole traders who want their software to also handle invoicing, expense scanning or bank reconciliation
If your spreadsheet habits are inconsistent, bridging software won’t fix underlying record-keeping gaps the way a full accounting package might

Who is 123 Sheets best for MTD for Income Tax?

123 Sheets is a good option for sole traders who already keep tidy spreadsheet records and don’t want to pay for or learn a full accounting platform just to meet MTD for Income Tax requirements. It’s HMRC-recognised, focused specifically on bridging, and generally cheaper than switching to something like Xero or QuickBooks. If you’d rather have bank feeds, receipt scanning and invoicing built in alongside your MTD compliance, a full accounting package may suit you better.

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Frequently asked questions

Is 123 Sheets free for Making Tax Digital for Income Tax?

No. 123 Sheets doesn’t have a free plan for MTD for IT. Its entry-level plan is £19.75 for your first year, per taxpayer, using your own spreadsheet.

What is bridging software, and how is it different from a full accounting package?

Bridging software like 123 Sheets connects your existing spreadsheet records to HMRC’s MTD system, without replacing how you keep your books. A full accounting package like Xero or QuickBooks replaces your spreadsheet with its own bookkeeping system, including bank feeds and automation.

Do I still need to keep my records in a spreadsheet if I use 123 Sheets?

Yes. 123 Sheets works by connecting to your spreadsheet records, so you’re still responsible for keeping your income and expenses up to date there.

Can 123 Sheets submit both quarterly updates and my final declaration?

Yes. 123 Sheets is built to handle the full MTD for Income Tax cycle, from quarterly updates through to the final declaration.

When do I need to start using MTD-compliant software like 123 Sheets?

Sole traders with qualifying income above £50,000 needed to comply from April 2026. Those with income between £30,000 and £50,000 must join from April 2027.

Compare MTD software for sole traders

123 Sheets is one option among several worth comparing. Browse the full MTD Software directory to compare it against Xero, QuickBooks, VitalTax and other HMRC-recognised options.

Pricing and offers correct at time of publication. Always check the 123 Sheets website for current pricing and promotional terms before signing up.