Can I keep using a spreadsheet for Making Tax Digital?

What bridging software is

Bridging software connects to the records you keep in a spreadsheet and sends the totals to HMRC for you. gov.uk says this type of software is sometimes called bridging software. Your spreadsheet stays where your numbers live; the bridging software is the step that submits each quarterly update.

Where to find compatible software

gov.uk has a tool for finding software that works with Making Tax Digital for Income Tax. Use it to see which products suit a spreadsheet, and check what each one costs and does before you sign up. HMRC does not give advice on specific products, and neither do we.

What the spreadsheet has to hold

For every transaction you record:

• the amount;
• the date the income was received or the expense incurred;
• a category.

If your turnover from a self-employment, or from UK property, is under £90,000, you can mark each line as income or expense with no further category detail. From £90,000 you need the full expense categories. Landlords with residential property must still flag restricted finance costs.

The digital links rule

If you use more than one product, for example a spreadsheet and separate software that uses its records, gov.uk says you must digitally link them before you send quarterly updates or your return. Linked cells in a spreadsheet, file transfers and APIs are among the methods it lists. Once a record has gone to HMRC in a quarterly update, you must not move it by hand within your record-keeping software. Keep everything in one workbook with formulas doing the totals, and you avoid retyping.

A simple way to set it up

• Pick your quarter type (standard or calendar) before the first update. You cannot switch after it has gone.
• Record every sale and cost as it happens, with the date, amount and a category.
• Check the year-to-date totals against your bank at each quarter end.
• Send the totals through your bridging software by the deadline: 7 August, 7 November, 7 February or 7 May.