HMRC Bridging Software for MTD: What It Is and Whether You Need It

MTD for Income Tax requires sole traders to submit quarterly updates to HMRC in a digital format — but it does not require you to use full accounting software to do it. Bridging software is the alternative: keep your records however you currently do, and use a bridging tool to handle the HMRC submission part.

Here's what it is, who it makes sense for, and what it actually costs.

What Bridging Software Does

When HMRC introduced Making Tax Digital, they required digital record-keeping and digital submission — but they built an API (application programming interface) that third-party software can connect to for submission purposes.

Bridging software sits between your records and HMRC's API:

1. You maintain your income and expense records in a spreadsheet (Excel, Google Sheets, or similar)
2. The bridging software reads your figures — either by direct link, file import, or manual entry
3. It formats them correctly and submits them to HMRC via the MTD API on your behalf
4. HMRC receives the submission as if it came from compliant software

You don't change how you keep records. You just add a submission step at each quarterly deadline.

Who It's Actually Built For

Bridging software suits sole traders who:

• Are deeply comfortable with spreadsheets and have no desire to change their record-keeping workflow
• Have a well-established bookkeeping system that already captures income and expenses accurately
• Want the lowest-disruption path to MTD compliance — keep doing what you're doing, just add a submission step
• Are comfortable with minimal support — bridging tools are lean and have less hand-holding than full accounting platforms
• Are genuinely cost-sensitive and the price difference between bridging and full software matters

It's less suitable for sole traders who:

• Want automatic bank feeds pulling transactions in
• Want their quarterly updates to happen automatically without a manual submission step
• Are not confident their current spreadsheet records would satisfy HMRC if reviewed
• Want software that also helps with VAT, invoicing, and financial reporting

How to Check If a Bridging Tool Is HMRC-Approved

Not all bridging software claiming MTD compatibility has been recognised by HMRC for MTD for Income Tax (ITSA). HMRC maintains a publicly available list of approved software at GOV.UK.

Critical distinction: Approval for MTD for VAT does not automatically mean approval for MTD for Income Tax ITSA. MTD for VAT has been running since 2019; MTD for ITSA is newer, and some bridging tools have VAT approval but not ITSA approval. Confirm ITSA-specific recognition before purchasing.

Search for "HMRC Making Tax Digital for Income Tax compatible software" on GOV.UK for the current approved list.

Bridging Software vs Accounting Software: Cost Comparison

	Bridging software	Entry-level accounting software
Typical cost	£5–£20/month	£14–£19/month
MTD submission	✅	✅
Bank feeds	❌	✅
Invoicing	❌ (usually)	✅
Expense tracking	❌ (you use your spreadsheet)	✅
Self Assessment support	❌	Varies
Learning curve	Low (if you know spreadsheets)	Medium

For many sole traders, the price gap between bridging software and entry-level accounting software is £5–£10/month. At that margin, it's worth asking whether the additional functionality of accounting software — bank feeds, automatic categorisation, invoicing — is worth the small extra cost.

FreeAgent at £19/month (or free with NatWest, RBS, Ulster Bank, or Mettle) handles MTD submission automatically, connects to your bank account, and is designed specifically for one-person service businesses. For some sole traders currently considering bridging software, FreeAgent's free-with-bank-account option changes the calculus entirely. See our FreeAgent review for details.

The Bridging Software Workflow in Practice

If you decide bridging software is right for your situation, the typical quarterly workflow looks like this:

1. Maintain your spreadsheet as usual throughout the quarter — log income and allowable expenses as they occur
2. At the quarterly deadline (7 August, 7 November, 7 February, or 7 May), open your bridging software
3. Import or link your spreadsheet figures — total income, total expenses by category
4. Review the summary — check the figures the bridging software will send to HMRC
5. Submit to HMRC — the software connects to HMRC's API and sends your quarterly update
6. Receive confirmation — HMRC acknowledges receipt

The submission itself takes 15–30 minutes once your spreadsheet is up to date. The work is in the ongoing record-keeping — which you were presumably already doing.

Which Bridging Tools Are Worth Looking At

Without endorsing specific products (pricing and approval status change regularly), categories of bridging tools HMRC-approved for ITSA have included:

• Dedicated bridging-only tools (submission-focused, no other features)
• Tax-focused software with bridging as a feature (TaxCalc, for example)
• Spreadsheet add-ins and plugins that connect Excel or Google Sheets directly to HMRC's API

Search GOV.UK's current approved software list filtered to MTD for Income Tax for up-to-date options.

The Bottom Line

Bridging software is a legitimate path to MTD compliance for sole traders who want to keep using spreadsheets. It's not a workaround or a grey area — HMRC built the MTD API specifically to allow this approach.

Whether it's the right choice for you depends on how much your current spreadsheet workflow is worth preserving versus what you'd gain from purpose-built accounting software.

If you're genuinely uncertain, use our software chooser — it takes 5 questions and gives you a recommendation based on your actual situation. Our MTD software options guide also covers the full landscape from free bridging to full accounting platforms.