Can I Use a Spreadsheet for MTD? Yes, Here's How

If you are one of the millions of sole traders and landlords who manage their finances in a spreadsheet, the switch to Making Tax Digital (MTD) might feel like a threat to your workflow.

Many software companies claim that you must buy their expensive, complex accounting suites to comply with the new rules. But if you are asking, "Can I use a spreadsheet for MTD?", the answer is a resounding yes.

HMRC's Official Stance on Spreadsheets

HMRC has been very clear on this topic. They understand that for many small businesses, a spreadsheet is the most efficient and cost-effective way to keep records.

According to HMRC's official guidance, a spreadsheet (like Microsoft Excel or Google Sheets) is a perfectly legal form of digital record-keeping. You do not need to abandon your current system.

The One Rule You Must Follow

While you can keep your records in a spreadsheet, there is one crucial rule you must follow: The Digital Link Rule.

Under MTD, you cannot manually copy your final totals from your spreadsheet and paste them into an HMRC web portal, nor can you type them in by hand. The transfer of data from your spreadsheet to HMRC must be digital and automated.

How to Connect Your Spreadsheet to HMRC

To create that required digital link, you need to use bridging software.

Bridging software is a simple, low-cost tool designed specifically for spreadsheet users. It does exactly what it sounds like: it builds a bridge between your Excel or Google Sheets file and HMRC's systems.

Here is how the process works:

1. Keep your records: You continue to log your income and expenses in your spreadsheet.
2. Upload your file: At the end of the quarter, you upload your spreadsheet to the bridging software.
3. Submit: The software reads your totals and securely submits them directly to HMRC.

Why Spreadsheets Are Often the Best Choice

For many landlords and sole traders, a spreadsheet paired with bridging software is actually a better choice than full accounting software:

• It's cheaper: Bridging software costs a fraction of what full accounting suites charge.
• It's familiar: You don't have to spend hours learning a new system.
• It's flexible: You can format your spreadsheet exactly how you want it.

At Abridge, we built our bridging software specifically to help you keep your spreadsheet. It's HMRC-recognised, works with both Excel and Google Sheets, and takes the stress out of MTD compliance.