The MTD Notebook · Records & software · 9 August 2026

MTD digital records: a spreadsheet plus bridging software is compliant

The single most expensive misreading of Making Tax Digital is that it forces you to buy a monthly accounting subscription. It does not. The law asks for a digital record and a digital submission — and a spreadsheet you already know how to use, joined to a small piece of bridging software, satisfies both. Here is what actually counts, in HMRC's own words, and the one rule that catches spreadsheet users out. Every requirement here is checked against GOV.UK and dated.

1. What a digital record actually is — three fields

A digital record sounds like a product you have to buy. GOV.UK defines it far more plainly: it is simply "a record of your income or expense that is created and stored using software that works with Making Tax Digital for Income Tax." That is the whole definition. It is not a particular app, and it is not a bank feed — those are conveniences, not requirements.

For each item of income or expense, HMRC asks for exactly three things:

Three columns. That is a description of a spreadsheet, and it is meant to be. And the records only have to cover your self-employment and property income and expenses — not your pension, savings, dividends or a partnership share. Those still get reported on the year-end return, but you do not have to keep digital records of them for MTD.

2. Why a spreadsheet is fine: bridging software

HMRC splits compatible software into two kinds. The first creates digital records — the all-in-one packages that link to your bank, scan receipts, and let you type entries in. The second kind connects to records you already keep, "such as those held in spreadsheets." GOV.UK gives that second kind a name:

So the compliant setup for someone with simple affairs is two pieces: a spreadsheet that holds the three-field records, and a bridging tool that reads the totals and sends the quarterly update. You keep the tool you understand; the bridge does the one thing a spreadsheet cannot — talk to HMRC's API. If you want to see exactly what those quarterly figures look like before you pick any software, our MTD quarterly update builder shows the handful of numbers an update actually contains, and the MTD overview explains where they sit in the year.

One constraint worth knowing early: you can only use one product for each submission. You cannot send half of a property update from one tool and half from another. But you can use a spreadsheet for records and a separate bridging tool to submit — that is the whole point of the category existing.

3. What you still keep the old way

Going digital for the summary does not free you from your ordinary paperwork. HMRC is explicit that you "must also continue keeping records like you normally do for Self Assessment" — the original documents behind the numbers, such as bank statements and invoices, or copies of them.

The distinction is worth holding onto, because it defuses a common worry:

• The digital record is the line in your spreadsheet: amount, date, category.
• The supporting document is the invoice or receipt that proves it. That can stay exactly where it always has — a folder, an inbox, a shoebox. MTD did not change it.

You are not being asked to photograph every receipt into an app. You are being asked to keep a running digital summary, and to keep your proofs as you always did.

4. The digital-link rule that trips spreadsheet users

This is the one part of the spreadsheet route that has a genuine catch, and it is the part the adverts lean on to make you feel you need everything in one box. If you use more than one product — for example a spreadsheet plus separate bridging software — the data has to move between them by a digital link, not by hand.

In practice, once a record has been created and sent to HMRC in a quarterly update, HMRC says you must not manually move it. Specifically, you must not:

• copy information by writing it out again in another cell or another program;
• use cut and paste, or copy and paste, to move records between products;
• email a spreadsheet so someone imports the figures into other software, or carry them across on a memory stick to be re-keyed.

Read the other way round, this is easy to satisfy and no reason to avoid spreadsheets. A digital link is exactly what bridging software provides: it reads your sheet directly, so nothing is retyped. Linked formula cells between sheets count as a digital link too. The rule is not "spreadsheets are banned" — it is "don't retype figures between tools." Pick a bridge that connects to your sheet and the requirement is met automatically.

One relief for co-owners: if you jointly let a property, HMRC confirms you do not need to link your digital records to the other landlord's. Your share is your own record. There is more on how joint property works in the landlord notebook.

5. What it actually costs — free software exists

The premise behind most MTD marketing is that compliance costs £20–£40 a month forever. For a business with simple affairs, that premise is false, and HMRC says so on the same page that lists the software:

All software on HMRC's list, free or paid, has been through the same recognition process, and HMRC is careful to add that it "does not recommend any product or software provider." A recognised free bridging tool is exactly as compliant as the most expensive subscription. What you pay more for is bank feeds, receipt scanning, dashboards and support — real conveniences, but conveniences, not the law. If your records fit in a spreadsheet and you are under the transaction limits, the compliant cost of MTD can be close to nothing.

So the honest shape of a simple, compliant MTD setup is: a spreadsheet with three columns, a recognised bridging tool to submit, your invoices kept as before, and four short quarterly updates a year. Whether those updates are due for you at all — and when — depends on your income and which return decides it, which is what the MTD deadlines page is for.