Can I Still Use Spreadsheets for Making Tax Digital?

Yes, but with a caveat

Yes, you can still use a spreadsheet. But you can't use a spreadsheet alone. You need an extra bit of software called a "bridging tool" to connect your spreadsheet to HMRC's systems.

A plain Excel file or Google Sheet cannot submit data to HMRC. It has no way to talk to HMRC's API. Bridging software sits between your spreadsheet and HMRC, reads your data, and sends it in the right format.

How it works

1. You keep your income and expenses in a spreadsheet, laid out in the format your bridging tool requires
2. When it's time to submit a quarterly update, you open the bridging software
3. It reads the relevant data from your spreadsheet
4. You review the summary and confirm
5. The bridging tool submits it to HMRC on your behalf

Your spreadsheet is your record-keeping system. The bridging tool is your submission mechanism. Together, they're MTD-compliant.

What bridging tools are available?

Several HMRC-recognised bridging tools exist, and some are free or very cheap:

AbraTax connects Excel spreadsheets to HMRC. Designed specifically for MTD for Income Tax.

My Tax Digital offers a free bridging option for spreadsheet users.

MTD Sheets gives your first submission free, then charges from about £0.49 per submission after that.

VitalTax (MTD in Excel) works as an Excel add-in, so you don't need to leave your spreadsheet at all.

Check HMRC's software list on GOV.UK to see the full range of approved bridging tools.

Is a spreadsheet still a good idea?

It depends on your situation.

Spreadsheets work well if:

• Your finances are simple (a few income sources, basic expenses)
• You're comfortable with Excel or Google Sheets and already have a system that works
• You don't want to learn new accounting software
• You want to minimise cost

Spreadsheets are harder if:

• You have lots of transactions (bank feeds in accounting software save a huge amount of time)
• You share records with an accountant (they generally prefer you to use cloud-based accounting software they can log into)
• You want automatic categorisation and bank reconciliation
• You're not that confident with spreadsheets to begin with

Where spreadsheets fall short

The downside is that a spreadsheet doesn't validate your data. Accounting software will flag obvious errors, duplicate entries, or miscategorised transactions. A spreadsheet just stores whatever you type into it.

If you make a mistake in your spreadsheet, the bridging tool will happily submit that mistake to HMRC. It has no way to know your numbers are wrong.

This means the accuracy burden falls entirely on you. No safety net.

Start cheap, upgrade later

Some people start with a spreadsheet and bridging software to keep costs down, then switch to full accounting software once they realise how much time bank feeds and automatic categorisation save.

That's a perfectly reasonable approach. MTD doesn't lock you into one system. You can switch software at any point.

What HMRC actually requires

For the avoidance of doubt: HMRC requires that your records are digital and that your quarterly submissions go through MTD-compatible software. A spreadsheet counts as a digital record. A bridging tool counts as compatible software. So the combination is fully legitimate.

What you can't do is keep paper records and type them into a spreadsheet at the end of the quarter. The records need to be digital from the point the transaction happens. If you're disciplined about entering things into your spreadsheet as they occur, you're fine.

Not sure what a quarterly update actually involves? Read what you have to submit each quarter. And if you want to weigh up all the software options, see our free and cheap MTD software comparison.