MTD Bridging Software Explained: Keep Your Spreadsheets and Still Comply

Making Tax Digital for Income Tax (MTD ITSA) does not require you to abandon your spreadsheets. If you already keep your income and expense records in a spreadsheet and want to continue doing so, bridging software provides a compliant way to submit your quarterly updates and final declaration to HMRC without switching to a full cloud accounting package.

What Bridging Software Is

Bridging software sits between your existing records and HMRC's systems. You keep your digital records in whatever format you already use, typically a spreadsheet such as Microsoft Excel or Google Sheets. The bridging software reads those records, formats the data correctly, and transmits the required updates to HMRC via the Making Tax Digital application programming interface (API).

HMRC confirms bridging software as a recognised category of MTD-compatible software. GOV.UK guidance describes it as software that "connects to your existing records, such as those held in spreadsheets" and handles the submission to HMRC.

How It Works in Practice

The process broadly works as follows:

1. You maintain your income and expense records in your spreadsheet as normal.
2. Before each quarterly update deadline, you open the bridging software.
3. The software connects to, or imports from, your spreadsheet, often using linked cells or a CSV export.
4. You review the category totals and confirm accuracy.
5. The bridging software submits the quarterly update to HMRC using your Government Gateway credentials.

The key rule is digital linking: the connection between your spreadsheet and the bridging software must be a genuine digital link, not a manual copy-and-paste or a hand-typed figure. HMRC's guidance is explicit that once a digital record has been created, you cannot manually re-enter it into another tool. You can use linked spreadsheet cells, CSV imports, API transfers, or emailing a file for import, but not copying numbers by hand.

Who Bridging Software Suits

Bridging software works well for:

• Sole traders with simple income and expenses who already use a spreadsheet and find it sufficient for their record-keeping.
• Landlords with a small number of properties who track rent and costs in a structured spreadsheet.
• People who are comfortable with spreadsheets and do not want to learn a new accounting system.
• Businesses with an existing bookkeeping process that does not need to change, just to be extended with a submission tool.

It is less suited to sole traders or landlords who need invoicing, bank reconciliation, automatic categorisation, or multi-user access. For those needs, a full accounting package (such as Xero, QuickBooks, or FreeAgent) will be more practical. See our software comparison article for a side-by-side look at the full-package options.

What Bridging Software Must Do

To be HMRC-recognised, bridging software must allow you to:

• Send quarterly updates to HMRC.
• Submit your tax return (the final declaration) by 31 January.
• Support all the income sources you need to report: self-employment, UK property, and foreign property if applicable.
• Work with your chosen accounting period (standard tax year or calendar update periods).

Not all bridging products support every income source, so check the software's feature list against your situation before committing.

The Digital Linking Requirement

Digital linking is the most common area of confusion for people using spreadsheets with bridging software. HMRC requires that data flows digitally between your record-keeping tool and the submission tool, without a manual break in that chain.

Permitted digital links include:

• Linked cells in spreadsheets (a formula in one sheet that references the value in another).
• Emailing a spreadsheet to an agent who imports it into their software.
• Uploading or downloading CSV or XML files.
• API or automated data transfer.

Not permitted:

• Typing a figure from one spreadsheet into a different spreadsheet or into the bridging software by hand.
• Using copy-and-paste to move records between tools.

If you use a two-product setup, where one spreadsheet handles records and the bridging tool handles submissions, make sure the link between them is a genuine digital connection before your first quarterly update.

Using More Than One Software Product

HMRC allows you to use a combination of products. For example, you might use a spreadsheet for digital records and bridging software purely for submission. You can also use bridging software alongside a partial accounting tool if needed.

If you use more than one product, the requirement is that they can work together to meet all your MTD ITSA needs, and that the data flows digitally between them.

Quarterly Deadlines Still Apply

Using bridging software does not change the submission deadlines. For the standard tax year accounting period, the four quarterly update deadlines are 7 August, 7 November, 7 February, and 7 May. Missing a deadline accrues a penalty point. See our article on the MTD penalty points system for details.

Bridging Software vs. Full Accounting Software: A Quick Comparison

For a full rundown of the main software options with pricing, see the compatible software section of our MTD guide.

What This Means for You

If your records are already in a spreadsheet that you understand and maintain consistently, bridging software is a practical and lower-cost route to MTD ITSA compliance. The key requirements are that your spreadsheet captures all the necessary digital records (date, amount, category), and that the link between your spreadsheet and the submission tool is a genuine digital connection.

If your record-keeping is less organised, or if you want features like bank imports or invoicing, a full accounting package will save you more time overall.

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DigiTaxHub.co.uk is an independent information resource and is not affiliated with or endorsed by HMRC. This article is for information purposes only and does not constitute tax or financial advice. Always verify current rules at GOV.UK and speak to a qualified accountant if you are unsure.