Can you keep using Excel or Google Sheets for MTD?

The answer: a spreadsheet can remain in the workflow

HMRC describes two broad kinds of software for MTD for Income Tax:

• software that creates and stores the digital records itself; and
• software that connects to records kept elsewhere, including spreadsheets. This is often called bridging software.

That means “MTD requires software” does not automatically mean “throw away your spreadsheet.” It does mean the complete collection of products you use must be digitally linked and work together to create and preserve the required records, send quarterly updates, add other income and complete the tax return.

You submit the return for the tax year before MTD starts in the normal way. For each MTD tax year, you add any other income and submit the Self Assessment return through compatible software by 31 January.

The three practical routes

Route 1: keep the spreadsheet and add bridging software

This can suit a seller with a disciplined spreadsheet who wants minimal change. You continue to record income and expenses digitally, then use compatible software to make the required submissions. The transfer must remain digital: examples HMRC gives include linked spreadsheet cells, CSV or XML import/export, an automated or API transfer, or emailing a spreadsheet and importing it into the next product.

Once a digital record has been included in a quarterly update, do not manually re-key, cut-and-paste or copy-and-paste it between products. Correct it through the digitally linked record and software workflow.

Check whether the chosen product handles quarterly updates and the end-of-year tax return, including other income sources. HMRC says you may use more than one product, but they must work together, and only one product can be used for each separate submission.

Route 2: keep your current bookkeeping software

If you already use an app, do not migrate merely because a new product advertises “MTD ready.” Search for your current product in HMRC's finder and confirm that your exact plan supports your income sources, accounting period, quarterly updates and tax return.

Route 3: move the records into an all-in-one product

This may suit someone moving from paper, wanting bank feeds and receipt capture, or struggling to reconcile several marketplaces. It creates more change, so trial a real payout period before migrating the full year.

What your digital records need to do

HMRC's current guidance says a digital record is an income or expense record created and stored in compatible software. A record includes the amount, date and income-or-expense category. Simpler categorisation can apply below £90,000 for each self-employment source and for the total UK property business. If a source reaches £90,000, full categories are needed from the start of that tax year. Foreign property has no £90,000 simplification threshold, and residential-property finance costs still need their separate category.

For retailers, HMRC also describes an option to create a digital record of daily gross takings rather than every individual retail sale. Whether and how that option fits marketplace settlement reports is a workflow question to confirm against the current guidance and your software.

Seven questions for any software provider

1. Is this exact product and plan currently listed by HMRC for MTD for Income Tax?
2. Does it support all of my sole trades and property-income sources?
3. Can it send four cumulative quarterly updates for each business, with deadlines of 7 August, 7 November, 7 February and 7 May?
4. Can the complete setup add my other income and submit my MTD-year Self Assessment return by 31 January?
5. Does it work with my tax-year or calendar accounting period?
6. If I keep a spreadsheet, what digital link transfers the data and how are corrections handled without manual re-keying or copy-and-paste?
7. Can I export my full records and audit trail if I leave?

“HMRC recognised” means the product has been through HMRC's recognition process for listed capabilities. HMRC explicitly says it does not recommend a product or provider.

A low-risk way to change

1. Pick one closed period. Use a week or one marketplace payout you already understand.
2. Reconcile it in the old system. Know the expected sales, refunds, fees and deposit.
3. Repeat it in the candidate setup. Check that the product preserves the same underlying story.
4. Export the result. Confirm that you can retrieve usable records rather than just a dashboard.
5. Confirm the submission path. Do not authorise or send a live update merely to test the interface.
6. Agree responsibilities. If an accountant is involved, record who corrects transactions, authorises software and submits each update.

You can use the QuarterReady route planner to turn your current setup and priority into a starting route.