This is one of the most common questions about Making Tax Digital. The answer is you can use a spreadsheet for record keeping, but you still need MTD software to submit to HMRC.
The Two Parts of MTD Compliance
MTD has two requirements:
- Keep digital records — your income and expenses must be stored digitally. See our guide on what counts as digital records under MTD for the full requirements.
- Submit to HMRC digitally — quarterly updates and your Final Declaration must be sent through MTD-compatible software via HMRC's API
A spreadsheet can satisfy requirement 1 but not requirement 2.
Using a Spreadsheet for Record Keeping
You can absolutely use Excel, Google Sheets, or any spreadsheet to record your income and expenses. HMRC doesn't mandate a specific tool for record keeping — it just needs to be digital (not paper).
What HMRC requires in your digital records:
- Date of each transaction
- Amount
- Category (the type of income or expense)
A simple spreadsheet with columns for date, description, category, and amount is fine.
Why You Still Need Software
The problem with spreadsheets is the submission part. You can't email a spreadsheet to HMRC or upload it to their website. MTD submissions must go through HMRC's API — and only MTD-compatible software can do that.
This is where you have two options:
Option 1: Spreadsheet + Bridging Software
Bridging software connects your spreadsheet to HMRC's MTD API. You keep your records in a spreadsheet, and the bridging software reads your figures and submits them to HMRC.
This was popular for MTD for VAT and some products exist for MTD for Income Tax. The downsides:
- Extra step — you need to map your spreadsheet data to the right format
- Error-prone — if your spreadsheet layout changes, the bridge may break
- Still costs money — bridging software isn't usually free
- No validation — a spreadsheet won't catch mistakes before you submit
Option 2: All-in-One MTD Software
Purpose-built MTD software handles both record keeping and submission in one place. You enter your income and expenses, and the software formats and submits everything to HMRC.
Benefits over the spreadsheet approach:
- One tool, no bridging needed
- Guided workflow — the software tells you what to enter and when to submit
- Validation — catches common mistakes before submission
- Deadline tracking — reminds you when quarterly updates are due
- HMRC connection — authenticates with your Government Gateway and submits directly
Free commercial software
HMRC does not provide its own MTD for Income Tax software. Free products are available from commercial providers; check their eligibility, limits and supported income sources in the official software finder.
The Real Cost Comparison
HMRC does not provide its own MTD for Income Tax software. Free products are available from commercial providers; check their eligibility, limits and supported income sources in the official software finder.
Our Recommendation
If you already have a well-organised spreadsheet and you're comfortable with the bridging approach, it can work. But for most people, purpose-built MTD software is simpler and not much more expensive than bridging software alone.
ClearMTD is in development and has not received HMRC production approval. Public registration and live submissions are unavailable. Its current scope is owner-operated digital records and in-year quarterly updates for self-employment, UK property and foreign property. Final Declaration and agent filing are not supported.
Join the free ClearMTD waitlist for launch updates. No launch date is confirmed.
No spreadsheet formatting. No bridging. No mapping columns.
Join the free ClearMTD waitlist for launch updates. No launch date is confirmed.
