The good news is: No, you don’t. HMRC will allow you to continue using spreadsheets, if you use them alongside a tool known as bridging software.
What is MTD Bridging Software?
Bridging software is a digital tool that “bridges” the gap between your spreadsheet and HMRC’s systems. Instead of switching to a completely new accounting system, you can continue recording income and expenses in Excel, as long as the data is submitted to HMRC digitally and in the correct format.
The software acts like a translator, taking the figures from your spreadsheet and submitting them through HMRC’s MTD-compliant system.
Who is Affected?
From April 2026, individuals with income over £50,000 from self-employment or property will be required to comply with MTD for ITSA. If you earn between £30,000 and £50,000, you’ll be included from April 2027.
The rules apply to the person, not the business, so if you have both rental and trading income, HMRC looks at the combined total.
What Will You Need to Do?
If you’re staying with spreadsheets, you’ll still need to:
- Keep digital records of your income and expenses
- Submit quarterly updates to HMRC using compatible bridging software
- Complete a final declaration (similar to a tax return) each year
So while the format of your records might not change, how you submit them will.
What Are Your Options?
There are now several user-friendly bridging tools available, including:
- Absolute Excel Bridge
- GoSimpleTax
- Forbes MTD Software
Most cost £40–£60 per year and are fully recognised by HMRC. They’re ideal for landlords with one or two properties, or sole traders who are confident managing their own numbers.
Alternatively, speak to your accountant about the software they are using. We are aware that the core software providers such as TaxCalc are launching solutions for agents to support their clients.
Is This a Long-Term Solution?
Possibly. HMRC has not set an end-date for spreadsheet use, but over time, it’s likely the system will favour full integration. However, bridging software gives you flexibility and time to adapt at your own pace.
Final Thoughts
If you’re comfortable with your spreadsheet and not ready to move to cloud accounting just yet, bridging software offers a compliant and affordable solution. It’s particularly well suited to smaller businesses and property owners who want to stay in control of their own data.
While cloud-based accounting software like Xero and Quickbooks will provide you with all you need to be MTD compliant without the need for bridging software, their true value lies in the reporting and controls over your finances and the significant reduction in manual data entry. If you are interested in transitioning your bookkeeping, VAT and management accounting to save time, reduce human error and perhaps even save year end accounting fees, then talk to us, we can help you decide on what system would work best for your needs and provide training if needed.