Can You Use Spreadsheets for MTD? Bridging Software Explained
Many sole traders manage their accounts in Excel or Google Sheets. Under MTD, you can continue to use a spreadsheet — but you'll need additional bridging software to submit your quarterly updates to HMRC. Here's how it works.
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Can You Still Use Spreadsheets Under MTD?
Yes — using a spreadsheet for MTD is permitted. HMRC explicitly acknowledges that some businesses may prefer to continue using spreadsheets and has made provision for this through the use of bridging software. The key point is that the spreadsheet is used for record-keeping, while the bridging software handles the compliant submission to HMRC.
This approach is valid, but it requires you to:
- Keep your spreadsheet records in a format compatible with your bridging software
- Categorise income and expenses according to HMRC's required categories
- Import or upload your quarterly figures into the bridging tool before each deadline
- Submit through the bridging tool rather than directly from your spreadsheet
The spreadsheet and bridging software together form a “functional compatible software” combination in HMRC's terminology.
What is Bridging Software?
Bridging software is a category of MTD-compatible application designed specifically to act as an intermediary between your existing records and HMRC's digital systems. You continue to keep your records however you prefer (typically a spreadsheet), and the bridging software reads your data and submits it to HMRC via the MTD API in the correct format.
The bridging software market for MTD for Income Tax is still developing. Several tools became available for MTD for VAT and similar products are emerging for the MTD ITSA programme. HMRC maintains a list of recognised compatible software on its website.
Bridging tools are generally simpler and cheaper than full accounting packages — they don't usually include invoicing, bank feeds, or payroll. They do one job: connect your data to HMRC.
How Bridging Software Works
The typical bridging workflow for MTD quarterly submissions looks like this:
- 1Maintain your spreadsheet — record your income and expenses throughout the quarter as normal in your spreadsheet.
- 2Categorise your totals— at the end of the quarter, ensure your figures are categorised according to HMRC's required income and expense categories.
- 3Import into bridging software — upload or link your spreadsheet to the bridging tool, which reads your categorised totals.
- 4Review and submit— check the figures in the bridging tool and submit your quarterly update to HMRC via the tool's MTD API connection.
Bridging Software vs. Native MTD Software
| Feature | Bridging + Spreadsheet | Native MTD Software |
|---|---|---|
| Monthly cost | Usually £3–£10/month | £14–£20+/month |
| Bank feeds | No | Yes |
| Invoicing | No | Yes |
| Receipt capture | No | Yes (most) |
| MTD submission | Yes (via bridging tool) | Yes (built in) |
| Familiar interface | Yes (your spreadsheet) | Learning curve |
Pros and Cons of the Spreadsheet Route
Pros
- +Lower monthly cost than full accounting software
- +Familiar interface — no need to learn new software
- +Full control over how records are structured
- +Works well for very simple businesses with low transaction volumes
Cons
- -Extra step required for every quarterly submission
- -No bank feeds, receipt capture, or invoicing tools
- -Higher risk of category errors that bridging software won't catch
- -Bridging software for MTD Income Tax is less mature than for MTD for VAT
Which Software Supports Spreadsheet Workflows?
The MTD for Income Tax bridging market is developing rapidly ahead of the April 2026 deadline. Several specialist tools already exist for MTD for VAT bridging and are expanding their features to cover MTD for Income Tax.
Among the major accounting software providers, Xero supports data import from spreadsheets and may suit spreadsheet-oriented users who want a hybrid approach. Sage also allows CSV imports as part of its workflow.
Always verify that any bridging software you consider is on HMRC's current list of recognised MTD-compatible software before committing to a subscription.
See our guide: Best MTD software for spreadsheet usersFind the Right Software for Spreadsheet Users
Our guide covers the best MTD software options for sole traders who want to keep using spreadsheets — or transition to a native MTD app.