MTD Bridging Software: Keep Your Spreadsheet and Still Comply (2026 Guide)

What Is MTD Bridging Software?

Making Tax Digital requires you to keep digital records and submit quarterly updates to HMRC. But "digital records" doesn't mean you need fancy accounting software. It means your records need to be in a digital format — and a spreadsheet counts.

The problem is that HMRC needs your quarterly summaries submitted through their API (Application Programming Interface). You can't just email them a spreadsheet. This is where bridging software comes in.

Bridging software sits between your spreadsheet and HMRC. It reads your income and expense totals from your spreadsheet and submits them to HMRC in the correct format. Think of it as a translator — your spreadsheet speaks one language, HMRC's system speaks another, and bridging software translates between them.

What bridging software does

• Connects to HMRC's MTD API on your behalf
• Reads summary totals from your spreadsheet (income and expenses by category)
• Formats the data into HMRC's required structure
• Submits your quarterly update digitally
• Gives you a confirmation receipt

What bridging software doesn't do

• Replace your bookkeeping — you still maintain your own records
• Categorise your transactions — that's still your job
• Chase invoices or manage clients
• Provide bank feeds or automatic transaction imports
• Generate invoices or quotes

In short: bridging software is a submission tool, not a bookkeeping tool. Your spreadsheet remains your bookkeeping system. The bridging software just handles the HMRC submission part.

How Bridging Software Works (Step by Step)

The process is simpler than most people expect. Here's what happens each quarter:

Step 1: You keep your records as normal

Throughout the quarter, you record your income and expenses in your spreadsheet exactly as you do now. Nothing changes about your day-to-day bookkeeping.

Step 2: At quarter-end, you total up your figures

At the end of each quarter, you calculate:

• Total income for the quarter (turnover from self-employment, property income, etc.)
• Total expenses broken down by HMRC categories (e.g., office costs, travel, advertising, professional fees)

Step 3: You enter the totals into the bridging software

Depending on the bridging software you use, this happens one of two ways:

• Manual entry: You type your summary totals into the bridging software's interface
• Automatic import: The bridging software reads specific cells from your spreadsheet (you set up the cell references once)

Step 4: The bridging software submits to HMRC

You click "submit" and the bridging software sends your quarterly update to HMRC through their API. You get a confirmation with a reference number.

Step 5: You're done until next quarter

That's it. The whole submission process takes about 10 minutes once you've set it up. Most of the work is in your ongoing bookkeeping, which you're already doing.

What Your Spreadsheet Needs to Look Like

HMRC doesn't specify a particular spreadsheet format, but your records need to include certain information. Here's what you need:

Minimum required records

• Date of each transaction
• Amount of each transaction
• Category (income or which type of expense)
• Description (brief note of what it was)

HMRC expense categories for self-employment

For your quarterly submissions, you'll need to split expenses into these categories:

• Cost of goods sold / direct costs
• Repairs and maintenance
• General administrative expenses
• Advertising and marketing
• Interest on business loans
• Bank charges and credit card fees
• Travel costs
• Phone, internet, and other utilities
• Accountancy and professional fees
• Other expenses

A practical spreadsheet layout

Here's a simple layout that works with most bridging software:

Then at the bottom of each quarter's sheet, have summary totals:

• Total income: £X
• Total expenses by category: £Y per category

These summary cells are what bridging software reads (or what you enter manually).

Free MTD Bridging Software Options

Several providers offer free bridging software. Here's an honest assessment of each:

HMRC's Free MTD Software

HMRC is providing its own basic free tool for MTD submissions.

• Cost: Free
• Pros: Guaranteed HMRC compatibility, no subscription, government-backed
• Cons: Very basic interface, no spreadsheet integration (manual entry only), no additional features, limited support
• Best for: People with very simple affairs who don't mind manual data entry each quarter

123Sheets

A popular bridging tool specifically designed for spreadsheet users.

• Cost: Free tier available (limited submissions), paid from £5/month
• Pros: Designed for spreadsheet integration, reads Excel/Google Sheets directly, clean interface
• Cons: Free tier may have submission limits, less established than major players
• Best for: Spreadsheet users who want automatic import rather than manual entry

Pandle

An accounting platform with a free tier that includes MTD submission.

• Cost: Free (with paid upgrades)
• Pros: Full accounting features on free tier, MTD VAT submission included, bank feeds
• Cons: More than just bridging software (could be overkill if you just want to submit), free tier has some limitations
• Best for: People open to trying a full accounting system at no cost

The reality about "free"

Free bridging software works, but comes with trade-offs. Common limitations include:

• Manual data entry (no spreadsheet auto-import)
• Limited or no customer support
• Fewer features and less polish
• May be discontinued or changed without notice

For a submission you make four times a year, paying £5-10/month for a reliable tool with support is often worth it. And remember: the cost is tax-deductible, so a £10/month subscription actually costs about £8/month after tax relief (basic rate taxpayer).

Paid Bridging Software (Worth the Cost?)

If you're willing to spend a small amount, these options offer significantly better experiences:

Absolute Tax (from £5/month)

• Excel add-in that submits directly from your spreadsheet
• No need to copy data anywhere — it reads your existing cells
• Good support and documentation
• Popular with accountants who manage multiple clients

SimpleTax (from £6/month)

• Clean, modern interface
• Spreadsheet upload feature
• Handles self-employment and property income
• UK-based support

TaxCalc (from £7/month)

• Well-established UK tax software company
• Desktop and cloud options
• Good for people who also do their own Self Assessment
• Comprehensive help guides

Is paid worth it?

At £5-10/month (£60-120/year before tax relief), the cost is genuinely small relative to the convenience. If you bill at £200/day and a free tool costs you an extra hour per quarter troubleshooting, you're losing more in time than you'd spend on a paid tool.

That said, if you have straightforward self-employment income with few expense categories, a free tool will do the job. Don't overpay for features you won't use.

Comparison Table: All Options at a Glance

Bridging Software vs Full Accounting Software

The big question: should you use bridging software and keep your spreadsheet, or switch to full accounting software like FreeAgent, Xero, or QuickBooks?

Choose bridging software if:

• You're comfortable with your current spreadsheet system
• Your bookkeeping is straightforward (one income source, clear expenses)
• You want to minimise change and cost
• You don't need bank feeds, invoicing, or automatic categorisation
• You're disciplined about keeping your spreadsheet up to date

Choose full accounting software if:

• You have multiple income sources or complex expenses
• You want bank feeds that automatically import transactions
• You'd benefit from built-in invoicing and payment tracking
• You want automatic expense categorisation
• You're already considering upgrading your bookkeeping system
• You bank with NatWest or RBS (FreeAgent is free for their customers)

The honest answer

For most sole traders earning over £50,000, bridging software is perfectly adequate. You already have a system that works. MTD doesn't require you to change it — it just requires you to submit summaries digitally four times a year.

However, if you're already struggling with your bookkeeping or spending hours on your Self Assessment each January, MTD might be the push to upgrade. Full accounting software like FreeAgent (from £7/month) genuinely does save time if you're currently doing everything manually.

For a detailed comparison of free vs paid MTD software options, see our complete MTD software comparison guide.

How to Set Up Bridging Software (Walkthrough)

Here's a generic setup process that applies to most bridging software. The exact steps vary by provider, but the overall flow is the same.

Before you start

You'll need:

• Your Government Gateway ID and password (the same one you use for Self Assessment)
• Your UTR (Unique Taxpayer Reference) number
• Your National Insurance number
• A spreadsheet with your income and expense records for the current period

Step 1: Create an account with your chosen bridging software

Sign up on their website. Most offer a free trial or free tier.

Step 2: Connect to HMRC

The bridging software will ask you to authorise it to submit on your behalf. This involves:

1. Clicking a "Connect to HMRC" button in the software
2. Being redirected to HMRC's website
3. Logging in with your Government Gateway credentials
4. Clicking "Grant authority" to allow the software to submit MTD updates

This is a one-time setup. You won't need to do it again unless you change software.

Step 3: Configure your spreadsheet mapping (if applicable)

If your bridging software imports from spreadsheets, you'll tell it which cells contain your summary totals. For example:

• Total income = Cell B25 on "Q1 Summary" tab
• Travel expenses = Cell B30 on "Q1 Summary" tab
• Office costs = Cell B31 on "Q1 Summary" tab

You set this up once, and it reads the same cells each quarter.

Step 4: Submit a test (optional but recommended)

Some bridging software offers a sandbox/test mode where you can practice submitting without it going to HMRC. If available, use it. It takes the fear out of your first real submission.

Step 5: Submit your first quarterly update

When your first quarter ends (5 July 2026 for the first MTD quarter), you:

1. Ensure your spreadsheet totals are up to date
2. Open the bridging software
3. Import or enter your totals
4. Review the figures
5. Click submit
6. Save the confirmation receipt

Common Mistakes to Avoid

1. Confusing quarterly updates with tax returns

A quarterly update is NOT a mini tax return. It's a simple summary: total income this quarter, total expenses by category. No capital allowances, no adjustments, no tax calculations. Those happen in your Final Declaration at year-end.

2. Thinking you need to categorise every transaction perfectly

Your quarterly updates are estimates. If you put something in "general admin" that should be in "office costs", it doesn't matter for the quarterly submission. You correct everything in the Final Declaration.

3. Waiting until the deadline to set up

Don't wait until July 2026 to set up your bridging software. Do it now (or in March/April) while there's no deadline pressure. Getting the HMRC authorisation sorted early means you can submit calmly when the time comes.

4. Over-complicating your spreadsheet

You don't need a complex spreadsheet. Date, description, category, amount. That's the minimum. If your current spreadsheet works for your bookkeeping, it almost certainly works for MTD — you just need quarterly summary totals.

5. Not keeping digital copies of source documents

MTD requires digital records, which includes keeping digital copies of invoices and receipts. A simple system: photograph every receipt, save it in a folder named by month. Most phones have a built-in document scanner now.

6. Paying too much for bridging software

If you're paying more than £10/month purely for bridging software (not full accounting), you're likely overpaying. The submission itself is straightforward — you're paying for convenience, not complexity.

Key Deadlines for 2026/27

If you're in the first MTD cohort (income over £50,000), here are your dates:

Remember: There's a 12-month penalty grace period for 2026/27. Even if you miss a quarterly deadline, you won't get penalty points during the first year. But late payment penalties and interest still apply if you underpay tax.

Use our free MTD Penalty Calculator to see exactly what penalties could apply in different scenarios.

Frequently Asked Questions

Can I use Google Sheets instead of Excel?

Yes. Most bridging software accepts CSV files exported from Google Sheets, and some integrate directly with Google Sheets. Check the specific bridging software's documentation for supported formats.

What if I use accounting software that isn't MTD-compatible?

You can use bridging software alongside your existing accounting software. Export your summary totals from the accounting software into a spreadsheet or enter them manually into the bridging tool. However, check whether your accounting software has an MTD update coming — many are adding MTD compatibility for free.

Can my accountant submit for me?

Yes. Your accountant can use their own MTD-compatible software to submit on your behalf. You'd still need to keep digital records and provide the data quarterly, but the submission itself can be delegated. Discuss this with your accountant — many are including MTD submissions in their existing fee.

What if I have both self-employment and property income?

You submit separate quarterly updates for each income source. Your bridging software should handle multiple income sources — check before signing up. You'll need separate records for each source.

Do I still need to file a Self Assessment return?

The annual Self Assessment return is replaced by the "Final Declaration" under MTD. It's similar — you confirm your figures and make any adjustments — but it's submitted through your MTD software rather than HMRC's Self Assessment system. The deadline remains 31 January.

What happens if my income drops below £50,000?

Once you're in MTD, you stay in MTD regardless of income changes. However, if your income was below the threshold on your qualifying tax return (2024/25), you're not required to comply until the threshold drops to include you (£30,000 from April 2027, £20,000 from April 2028).

Can I switch bridging software mid-year?

Yes. You'll need to authorise the new software with HMRC (same process as initial setup) and de-authorise the old one. Your previous submissions remain on HMRC's records regardless of which software submitted them.

Further Reading

• MTD Software: Free vs Paid — Which Is Right for You? (2026 Comparison)
• Making Tax Digital: The Complete Guide for UK Sole Traders (2026)
• MTD 30-Day Setup Checklist: Get Ready Before April 2026
• Got an HMRC Letter About MTD? Here's What to Do Next
• MTD Penalty Grace Period: No Fines for Your First Year (2026/27)
• MTD for CIS Subcontractors: Complete Guide
• Free MTD Readiness Checker Tool
• Free MTD Penalty Calculator