Spreadsheets are going away. This is what a lot of sole traders, landlords, and accountants are hearing right now, and because that message is coming from software companies with expensive products to sell, it has started to feel like a fact. HMRC has not banned spreadsheets. If you already use Excel, Google Sheets or any other spreadsheet software to track your income and expenses, you do not automatically need to move everything into full accounting software. In fact at it's core Making Tax Digital has been about keeping digital records - and spreadsheets fit the bill perfectly. You just need a compliant way to connect your records to HMRC. That is exactly what bridging software does.
TL;DR: HMRC is not banning spreadsheets for MTD Income Tax. If you already use Excel, Google Sheets or other spreadsheet software to keep your income and expense records, you can usually keep using them. You just need compatible software that links to your spreadsheet and sends the required updates to HMRC. This is what bridging software does: it gives spreadsheet users a compliant way to file under MTD without forcing them to move everything into full accounting software.
1. Are Spreadsheets Allowed Under MTD For Income Tax?
Yes, directly from GOV.UK.
"If you use spreadsheets for your records, you can continue to use them, but you will still need software that links to your spreadsheets (sometimes called bridging software)." - GOV.UK Use Making Tax Digital for income tax.
HMRC's own policy framework on digital record keeping reinforces this. Customers may already be using spreadsheets to maintain their business records, and under MTD, they will remain an acceptable form of digital record keeping.
Spreadsheets are not a workaround; they are a supported first-class option.
Not sure what a compliant spreadsheet actually looks like in practice? AbraTax has free example spreadsheets showing exactly how to can keep digital records for MTD for self employment, UK property and foreign property income. These aren't a standard, but represent the minimum information you need to store in a way that works.
Download the free examples of MTD compliant digital records.
2. Why Does Everyone Think Spreadsheets Are Being Banned?
The narrative around Making Tax Digital has been heavily shaped by software companies with a clear incentive to make you think you need their product. Cloud accounting tools, bank feeds, receipt scanning, and automated categorisation. The messaging makes it sound like this is what compliance looks like. If you're not on Xero or QuickBooks by April 2026, you're already behind. That's not what HMRC wants you to do; that's just marketing.
As the AbraTax team noted after attending Accountex London 2026, one of the biggest annual accounting events in the UK, an HMRC official confirmed at the event that spreadsheets are allowed under MTD if you have already used Excel or Google Sheets to track income, expenses, or property costs. MTD for Income Tax does not mean spreadsheets are banned or that you have to change the way you work.
There is also a genuine confusion between two different things: record keeping and submission. People see digital records in the MTD guidance and assume it means switching to full accounting software. It doesn't. It means keeping records in a digital format. Spreadsheets have always been digital.
3. What Does HMRC Actually Require Under MTD for Income Tax?
From 6 April 2026, sole traders and landlords with qualifying income above the threshold will be required to use compatible software to create, store and amend digital records for self-employment and property income and expenses. Send quarterly updates to HMRC throughout the tax year. Submit a tax return by 31 January the following year. That is the requirement. There is no requirement for bank feeds. No requirement for receipt scanning. No requirement for any specific software brand.
What is Qualifying Income?
Qualifying income is simply the total you earned from self-employment or property before taking off any expenses or deductions.
For example, if you are a sole trader who invoiced £60,000 last year but spent £15,000 on business costs, your qualifying income is £60,000, not £45,000.
If you're a landlord who collected £35,000 in rent but paid £10,000 in mortgage interest and repairs, your qualifying income is £35,000, not £25,000.
HMRC looks at your most recent tax return to work out which number applies to you. If your 2024-25 tax return shows income of over £50,000, you're in the first wave and need to be ready by 2026.
The rollout schedule as published on GOV.UK is:
| Self Assessment Tax Return | Qualifying Income | Start date |
|---|---|---|
| 2024 to 2025 tax year | More than £50,000 | 6 April 2026 |
| 2025 to 2026 tax year | More than £30,000 | 6 April 2027 |
| 2026 to 2027 tax year | More than £20,000 | 6 April 2028 |
If your income is over £50,000 and you still use spreadsheets, download our free MTD spreadsheet examples before you choose software.
If you're above the £50,000 threshold and haven't yet signed up, your first quarterly submission deadline is 7 August 2026.
What counts as a digital record?
According to the GOV.UK's guidance on creating digital records, when you create a record, you'll need:
- the amount
- the date income was received or expenses occurred
- the category of your income or expenses (using the same categories as Self Assessment)
If your spreadsheet captures those three points clearly, it covers the core information HMRC expects in a digital record.
4. What is a Digital Link, And Does a CSV Upload Count?
A digital link is an electronic transfer of data between the software tools that together make up your MTD compatible setup. The purpose is to ensure data moves between tools without manual re-entry, thus maintaining the integrity of your records.
Source: HMRC Policy Framework on Digital Record Keeping and Digital Links · GOV.UK
Below are the valid forms of digital data transfers:
- Linked cells in spreadsheets - a formula in one cell that references a value from another cell
- CSV or XML inputs and exports - uploading your spreadsheet into bridging software
- Emailing a spreadsheet for input into another system
- Transferring data to a portable device (e.g. USB) for input into another system
- API transfers, OCR, AI-assisted automation and other automated data flows
Yes, a CSV upload from your spreadsheet into bridging software is a valid digital link. This is the most common route for spreadsheet users.
AbraTax bridging templates are built specifically for this. You link your existing spreadsheet cells to the template using formulas, save a CSV, and upload it into the template. No manual re-entry, no copy-paste. Fully compliant.
Download the self-employment or UK property MTD bridging template.
What is not a valid digital link?
- Manually copying figures from one system to another by hand
- Using cut and paste to move data between software
- Retyping data that already exists digitally
The rule is simple: data must enter the system once and then travel digitally from that point forward.
5. Why Spreadsheets Won't Disappear
As we mentioned in our 10 Best Bridging Software Options in the UK blog, spreadsheets have been part of businesses and record keeping for years. They are like email: not new or flashy, but still used every day because they are simple, familiar, and useful. Even after so many new technologies, email has never disappeared.
Similarly, for many landlords, sole traders and small accountancy practices, spreadsheets are not a temporary workaround. They are the system they already understand.
There are also practical reasons HMRC cannot phase them out:
- A significant portion of UK sole traders and landlords already manage their finances this way - spreadsheets are foundational for many.
- The cost and disruption of switching to full accounting software are real
- There is nothing in the underlying legal requirement that a well-maintained spreadsheet cannot meet
HMRC's digital links framework exists precisely to make spreadsheet-based workflows compliant, not to eliminate them. The minimum information needed for a digital record (amount, date, category) maps directly onto how most people already structure their spreadsheets.
6. When Bridging Software Makes the Most Sense
Bridging software is a lightweight tool that sits between your spreadsheet and HMRC's API. You keep your records the way you already do, upload or link your file, and the bridging tool handles the quarterly submission.
GOV.UK describes it this way: bridging software can connect to your spreadsheets and make your submissions to HMRC, and it's explicitly recommended for anyone who wants to keep using your current software and adapt your record keeping for Making Tax Digital.
It's the right fit if you are:
- A spreadsheet user who doesn't want to change how you work. MTD doesn't require you to stop using Excel or Google Sheets. It requires you to submit digitally.
- A sole trader with straightforward income and expenses, you don't need automation, bank feed syncing, or complex categorisation. A clean spreadsheet and bridging software covers everything MTD requires.AbraTax's self-employment demo video walks you through exactly which figures to link and how.Download the free self-employment MTD bridging template.
- A landlord who manages property income, property categories like rent, repairs, mortgage interest, insurance, and management fees, all these map easily onto a spreadsheet.AbraTax has a dedicated UK property demo video plus a worked example showing what compliant property digital records look like, so you know exactly what you're aiming for.Download the UK property MTD template. A landlord with foreign property income? There’s a separate template for that too. Download the foreign property MTD template.
- An accountant or agent who has clients who are comfortable with maintaining records in Microsoft Excel or similar spreadsheets. Since Excel cannot connect directly to HMRC, bridging software will provide the necessary digital connection it needs to be MTD compliant.
The AbraTax agent portal lets you manage multiple clients, handle submissions at scale, and keep deadline visibility, all while your clients keep working in spreadsheets.
7. When You Might Need Full Accounting Software
There are cases where a full accounting platform genuinely serves you better. If you are running a larger business with complex workflows like multiple income streams, payroll, integrated invoicing, and automated reconciliation, cloud accounting software offers real value at that scale.
GOV.UK also notes that some software products let you connect your existing records in other software too, so the lines aren't always rigid.
But for many sole traders, landlords and agents with simple clients, full accounting software may be more than they need. If the records are already clear in a spreadsheet, the real requirement is usually a compliant way to send the data to HMRC.
8. How AbraTax Fits In
AbraTax is built specifically for the spreadsheet-to-submission workflow and is HMRC-recognised software. You keep using Excel. AbraTax provides free downloadable bridging templates for self-employment, UK property, and foreign property income, plus example compliant digital record spreadsheets so you can see exactly what MTD-ready records look like before you file.
You link your existing spreadsheet cells to the template using formulas, save as CSV, upload, and AbraTax submits digitally to HMRC via their secure MTD API, no banking connections, no rebuilding how you manage your finances
AbraTax also has an Agents portal for accountants and bookkeepers managing multiple spreadsheet-based clients.
Already on Xero or QuickBooks but realising you're paying for features you do not actually use? AbraTax supports migration. You can bring your existing records across and switch to a simpler spreadsheet-first workflow without losing your data or starting from scratch.
For more information, contact support@abratax.co.uk.
9. Frequently Asked Questions
1. Are spreadsheets MTD compliant?
Yes, spreadsheets can be MTD compliant as long as they are used properly. HMRC has not said that Excel or Google Sheets are being banned. If you keep your income and expenses in a spreadsheet, you can usually continue doing that. The important bit is that your records must be digital and you need compatible software that can link to your spreadsheet and send required updates to HMRC. That is where bridging software comes in. It connects your spreadsheet records to HMRC without forcing you to move everything into full accounting software.
2. Do I need to switch to Xero or QuickBooks for MTD?
No. MTD does not mean you have to switch to Xero, QuickBooks, or any other full accounting platform. These tools can work well for some businesses, especially if they want bank feeds, invoicing automation, and more detailed bookkeeping features, but they are not the only route if you already keep clean records in a spreadsheet. You can use bridging software instead. HMRC's requirement is about keeping digital records and sending updates through compatible software, not about using one specific software brand.
3. What is a digital link in MTD?
A digital link is the way data moves electronically from one place to another without being manually re-tagged. For example, your spreadsheet might link figures using formulas, export data as a CSV file, or connect to bridging software so the information can be sent to HMRC. The key point is that once the data has been entered into your digital records, it should move digitally from there. Manual copying, pasting, or re-typing figures is not the same thing. Under MTD, the aim is to keep a clear digital trail from your records to the final submission, which confirms that MTD software can connect to existing records, including spreadsheets.
4. When do I need to start using MTD for income tax?
MTD for income tax is being introduced in stages from 6th April 2026. It applies to sole traders and landlords with qualifying income over £50,000. From 6 April 2027, the threshold drops to over £30,000. From 6 April 2028, it drops again to over £20,000.
Qualifying income means your total income from self-employment and property before expenses are deducted, so if you earned £60,000 and spent £15,000 on costs, HMRC looks at the £60,000 figure, not the £45,000 profit. You will need software to create digital records and send quarterly updates and submit your tax return.
5. Does HMRC require bank feeds for MTD?
No, HMRC does not require bank feeds for MTD. Bank feeds can be useful for some businesses if you want transactions to come into your software automatically, but they are not compulsory. You can keep your records in a spreadsheet as long as the records are digital and connected to compatible software for the HMRC submission. This matters because many sole traders, landlords, and agents do not want to connect bank accounts just to meet MTD rules. If your spreadsheet records include the right details, such as amount, date, and category, bridging software may be enough.
10. Conclusion:
MTD is not about replacing spreadsheets. It never was.
You can continue using your spreadsheets; you just need software that links to them. That's bridging software. It's a one-step addition to a workflow that likely already meets the core digital record requirements.
The confusion comes from conflating what the law requires with what software companies want to sell you.
Spreadsheets are not going away, and neither is the option to keep them under MTD. If your records are already in Excel or Google Sheets, you're closer to compliance than most people think. You just need the right tool to connect them to HMRC. Already keeping records in a spreadsheet? Try AbraTax for free.
Sources:
Use Making Tax Digital for Income Tax: Create digital records - GOV.UK
AbraTax - HMRC-recognised MTD software
Choose the right software for Making Tax Digital for Income Tax - GOV.UK
10 Best MTD Bridging Software Options for Income Tax 2026 - AbraTax Blog
Before you use Making Tax Digital for Income Tax - GOV.UK
Sign up for Making Tax Digital for Income Tax - GOV.UK
Getting started with AbraTax: file your first MTD Income Tax update - AbraTax Blog
Making Tax Digital for Income Tax explained: deadlines, rules and how to prepare AbraTax Blog
HMRC Policy Framework: Digital Record Keeping and Digital Links in MTD for Income Tax (v1.0)