Microsoft Excel

Excel is the spreadsheet most sole traders already know. There’s a free version on the web, and the full desktop app comes with Microsoft 365 from £8.49 a month.

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At a glance

You can keep your books in Excel with your own layout or a ready-made template. It won’t file anything with HMRC by itself, but paired with bridging software it can still be used under Making Tax Digital.

Free

£84.99

A year for Microsoft 365 Personal

Excel for the web

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What is Microsoft Excel?

Excel is Microsoft’s spreadsheet software. Sole traders use it to record income and expenses, work out tax estimates, track invoices and plan cash flow. It comes as a free web version and as desktop, web and mobile apps with a Microsoft 365 subscription.

Is Excel free?

The web version is. Excel for the web is free with a Microsoft account, with sharing, real-time collaboration and 5 GB of cloud storage. For the desktop app you need a Microsoft 365 subscription. Microsoft’s UK Excel page doesn’t list a one-off purchase option.

Key features

Formulas and functions for totals, tax estimates and running balances
Tables, filters and PivotTables to summarise income and expenses
Charts for seeing trends at a glance
Templates for budgets, invoices and trackers
Sharing and real-time collaboration, for example with your accountant
Desktop, web and mobile apps with Microsoft 365
Works with HMRC-recognised bridging software for Making Tax Digital

Pricing

Prices are from Microsoft’s UK site.

Excel for the web - Free

For light use:

Runs in your browser
Sharing and real-time collaboration
5 GB of cloud storage

Microsoft 365 Personal - £8.49/month

For one person:

Or £84.99 a year
Word, Excel, PowerPoint, Outlook and OneNote desktop apps

Microsoft 365 Family - £10.49/month

For a household:

Or £104.99 a year
Covers 1 to 6 people

Microsoft 365 Business - from £5.40 per user/month

For business accounts, paid yearly:

Business Basic at £5.40 includes the web and mobile versions of Excel
Business Standard at £18.10 adds the desktop apps

Is Excel MTD compatible?

Not on its own. Excel can hold your digital records, but it can’t send quarterly updates to HMRC. To use a spreadsheet under Making Tax Digital for Income Tax you need HMRC-recognised bridging software that links your spreadsheet to HMRC. See our MTD Software directory for bridging tools such as VitalTax and 123 Sheets.

Pros and cons

Pros:

You probably know how to use it already
Free on the web
Completely flexible - set up your books the way you think
Easy to share with an accountant
Can be used for MTD with bridging software

Cons:

Nothing is automatic - no bank feeds or receipt capture
Easy to break a formula or mistype a figure
No MTD filing without separate bridging software
The desktop app needs a subscription
You have to build or buy a template to get started

Who is Microsoft Excel best for?

Excel suits sole traders with simple finances who like to see and control every number. If you have a manageable number of transactions and you’re comfortable with a spreadsheet, it can do the job for little or nothing. A ready-made template saves building your own. Once you’re in Making Tax Digital you’ll need to add bridging software, and if the manual entry starts to drag, that’s the point to look at accounting software.

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Frequently asked questions

Is Excel free?

Excel for the web is free with a Microsoft account. The desktop app comes with Microsoft 365, from £8.49 a month or £84.99 a year for the Personal plan.

Can I use Excel for Making Tax Digital?

Yes, with HMRC-recognised bridging software that sends your figures from the spreadsheet to HMRC. Excel can’t submit anything on its own.

Can I keep my business records in a spreadsheet?

Yes. A spreadsheet is fine for recording income and expenses. Under MTD for Income Tax the records must be digital and submitted through compatible software.

Do I need the desktop version of Excel?

Not always. The free web version handles a basic income and expenses tracker. Some templates and bridging add-ins work best in the desktop app, so check before you buy.

What’s the difference between Excel and accounting software?

Excel is a blank spreadsheet you set up yourself. Accounting software adds bank feeds, invoicing and built-in tax filing, for a monthly fee.

Compare spreadsheet and planning tools for sole traders

Microsoft Excel is one option among several worth comparing. Browse the full Spreadsheet & Planning Tools directory to compare it against Google Sheets, Sole Trader Tax Tracker and other options.

Pricing and offers correct at time of publication. Always check the Microsoft website for current pricing before signing up.