UK · Verified 31 July 2026 · Not tax advice

Can I keep using a spreadsheet under MTD? Yes — with a catch

The honest answer is yes. A spreadsheet can hold your digital records, and bridging software can file from it. Nobody is going to make you buy Xero. But the route has real friction, and for a good number of people the free full package is genuinely less work than the spreadsheet they already own. This page sets out both sides without pretending either is perfect.

Yes, spreadsheets still work — here is how The friction, named rather than glossed over Who should move, and who should stay put

Last verified 31 July 2026. Promotions change roughly monthly — confirm before you subscribe.

The short answer

Yes, you can keep using a spreadsheet under Making Tax Digital for Income Tax — provided the spreadsheet holds your records at transaction level and is connected to HMRC through bridging software by a digital link rather than by you retyping figures. What you cannot do is file directly from Excel, and you cannot summarise your month into one cell and call that a digital record.

So the question is not really “is it allowed”. It is “is it the least work”. And for a lot of readers the answer to that is no, for one specific reason: some of the best full packages are free.

FreeAgent is free permanently with a NatWest, RBS, Ulster Bank or Mettle business account (Mettle requires one transaction a month). Full package, not a cut-down tier.
Sage has a genuinely free sole trader tier — £0, capped at 5 invoices a month, non-VAT only.

Against £0, a spreadsheet plus a paid bridging tool can end up costing more money and more time. That is the uncomfortable bit, and it is worth checking before you dig in.

Not tax advice — confirm with HMRC or your accountant

Fizoral is an independent comparison site, not an accountancy practice. Everything on this page is general information for UK sole traders and landlords, verified on 31 July 2026. Nothing here is tax advice and nothing on it creates a professional relationship. The Making Tax Digital timetable has already been delayed and re-scoped more than once, so confirm your own position before you act. HMRC’s own guidance is at gov.uk: Using Making Tax Digital for Income Tax.

How the spreadsheet route actually works

You keep your income and expenses in a spreadsheet at transaction level, then a piece of bridging software reads that sheet and submits the quarterly totals to HMRC in the format HMRC requires. The bridging tool does no bookkeeping — it is a translator, and the quality of what it submits is entirely the quality of your sheet.

The chain looks like this, and every arrow in it has to be a digital link:

Transactions land in the sheet. Typed in by you, or imported from a bank CSV. One row per transaction, with a date, an amount and a category.
Formulas produce the quarterly totals per business source. Linked cells and formulas are digital links, so this part is fine as long as you are not retyping between tabs.
Bridging software reads those totals and submits the update. It must be on HMRC’s list of compatible software — check at gov.uk: find software compatible with MTD for Income Tax.
At the year end the same chain carries the final declaration, with the reliefs and adjustments added.

The rule that breaks most home-made sheets

The one thing you cannot do is retype. If your process is “look at the total in cell H47, open the HMRC portal, type it in”, that is not a digital link and it is not the route described here. The whole point of bridging software is to remove you from that step.

The friction nobody mentions when they say “you can keep your spreadsheet”

The spreadsheet route is legal and workable, but it costs you in five specific places: manual capture, categorisation discipline, source separation, a second product to maintain, and no safety net when something is wrong. None of those is fatal on its own. Together they are why most people who try it for a year do not try it for two.

Friction 1

You are the bank feed

Software pulls your transactions in automatically. A spreadsheet does not. Every quarter, somebody has to get the data in — and that somebody is you, four times a year, on a deadline you did not previously have.

Friction 2

Categorisation never learns

Software remembers that the fuel card is travel and the same supplier is always cost of sales. A sheet remembers nothing. Your accuracy in quarter four depends entirely on your discipline, not on the tool getting better.

Friction 3

Separate sources are your problem

Self-employment and property are separate business sources with separate quarterly updates. Software models that natively. In a spreadsheet, the separation exists only because you built it and only for as long as you maintain it.

Friction 4

Two products, not one

You now maintain a spreadsheet and a bridging tool, and both have to keep working, keep being supported and keep being on HMRC’s list. A single package is one thing to keep alive instead of two.

Friction 5

No safety net

Delete a row, break a formula, drag a total over the wrong range — a spreadsheet will submit that number without a murmur. Software will not catch everything either, but it will catch more, and it keeps an audit trail while doing it.

Friction 6, the expensive one

You may be paying for less

A paid bridging tool on top of your time, versus £0 for FreeAgent with a NatWest, RBS, Ulster Bank or Mettle account, or £0 for Sage’s free sole trader tier. Price the whole chain before you commit to the sheet.

Who should stay on a spreadsheet, and who should move

Stay if your spreadsheet is already transaction-level, already separates your sources, and already gets updated without you having to think about it. Move if your sheet is really a year-end reconstruction exercise, because the quarterly rhythm will expose that within one cycle.

Stay on the spreadsheet if

It is already transaction-level and you update it at least monthly without being nagged.
You have one simple source — one trade, no property, no complications.
Your volumes are low. A handful of invoices and a short expense list a month does not need automation.
You genuinely know your way around a sheet and the formulas are yours, not inherited from someone who left.
Your bank does not offer FreeAgent free and you are unwilling to move banks or pay.

Move to software if

Your sheet is built in January from a pile of receipts. Quarterly reporting will break this within one cycle.
You have more than one source — a trade plus property, or UK plus overseas property.
You bank with NatWest, RBS, Ulster Bank or Mettle, in which case FreeAgent is free and the argument is basically over.
You are VAT registered or heading that way, which adds obligations a sheet handles badly.
You would have to buy a bridging tool anyway. At that point you are paying for a partial solution.

If you decide to move, here is what it costs

Moving off a spreadsheet does not have to cost anything. Two of the four platforms we track have a genuinely free route, and the cheapest paid option over 24 months is QuickBooks at £186 — £121.20 less than Xero over the same period. Every figure below is ex VAT and modelled over 24 months, after the introductory discount expires.

Entry-plan cost over 24 months, ex VAT, for the four platforms we track
Option	Entry plan	Headline price	24 months	Notes
FreeAgent via bankFree forever	Full package	£0	£0	NatWest, RBS, Ulster Bank or Mettle. Mettle needs 1 transaction a month.
Sage Sole Trader Free	Free tier	£0	£0	5 invoices a month, non-VAT only.
QuickBooks	Sole Trader	£10/mo	£186	90% off for 6 months → £1. Cannot file VAT — Simple Start at £16 is where VAT begins.
Xero	Ignite	£16/mo	£307.20	80% off for 6 months → £3.20. 30-day trial plus 1 month free.
Sage	Accounting Start	£18+VAT	£378	Sage quotes plus VAT; normalised to ex VAT here. 3 months free promo.
FreeAgent	Sole Trader	£19/mo	£399	50% off for 6 months → £9.50. Free permanently via the banks above.

All prices ex VAT, verified 31 July 2026. Sage publishes plus VAT and we have normalised it and said so. Promotions change roughly monthly and are usually for new customers only. MTD compatibility is not a differentiator here — all four are on HMRC’s recognised list, which makes it table stakes rather than a feature.

Full workings are on cheapest accounting software over 24 months, and the free routes are set out in detail on genuinely free accounting software. If you are a landlord, start instead with best accounting software for landlords — the answer there is different and cheaper.

See the free routes first → Compare all four platforms →

Questions people actually ask

Spreadsheets and MTD: common questions

Short answers. Where the honest answer is “check with HMRC”, that is what it says.

Can I still use a spreadsheet under Making Tax Digital?

Yes. A spreadsheet can hold your digital records, but it cannot talk to HMRC on its own. You pair it with bridging software, which reads the sheet through a digital link and files the quarterly update for you. It is a legitimate route, not a loophole.

What is bridging software?

Bridging software is a small tool whose only job is to take figures out of your spreadsheet and submit them to HMRC in the format HMRC requires. It does not do your bookkeeping. It is a translator sitting between your sheet and HMRC, and you still need a spreadsheet that is genuinely up to the job.

Is bridging software free?

Some bridging tools are free or very cheap; others are not. We do not publish a bridging price table because we have not verified those prices to the standard we hold ourselves to. Check HMRC’s list of compatible software on gov.uk and price the specific tool before you commit.

Is a spreadsheet cheaper than accounting software?

Not always, and that surprises people. FreeAgent is free permanently with a NatWest, RBS, Ulster Bank or Mettle business account, and Sage has a genuinely free sole trader tier. Against a free full package, a spreadsheet plus a paid bridging tool can cost more and do less.

Will my spreadsheet still work if I let a property as well as trade?

It can, but the sheet has to keep self-employment and property strictly apart, because they are separate business sources with separate quarterly updates. Overseas property is separate again. This is where home-grown sheets most often break down – see our landlord page for the detail.

Does HMRC prefer software over spreadsheets?

HMRC’s requirement is about digital records and digital links, not about which product you buy. Both routes can comply. The practical difference is where the effort lands: software automates capture and categorisation, a spreadsheet leaves both to you.

Where to go next

Carry on down the chain

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