MAKING TAX DIGITAL GUIDE

Can you use Excel or spreadsheets for Making Tax Digital?

Yes, you can keep your records in Excel or another spreadsheet under Making Tax Digital. But a plain spreadsheet cannot send anything to HMRC on its own. You normally need bridging software, and the links between your records and that software must be digital. This guide explains how it works and where people go wrong.

Figures for the 2026/27 tax year · Last reviewed 21/10/2026

The short answer

HMRC does not ban spreadsheets. What it requires is that your records are kept digitally and that the figures reach HMRC through compatible software, without anyone retyping them along the way.

A spreadsheet can do the first part. It holds your digital records. Bridging software does the second part. It reads the figures from the spreadsheet and sends them to HMRC through HMRC's systems. Put the two together and you have a setup that meets the rules.

The catch is the journey in between. Every step from the original record to the submission has to be a digital link. One manual copy and paste can break the chain.

Who has to follow Making Tax Digital

There are two separate schemes, and spreadsheets can work for both.

Making Tax Digital for VAT

HMRC's VAT Notice 700/22 says all VAT-registered businesses must keep records digitally and file VAT returns using software that connects to HMRC. You must register for VAT once your taxable turnover for the last 12 months goes over £90,000. Businesses below that figure that register voluntarily are covered too.

Making Tax Digital for Income Tax

This applies to sole traders and landlords who are registered for Self Assessment. Whether you are in depends on your qualifying income, which is your total income from self-employment and property before expenses:

From 6 April 2026: if your qualifying income was over £50,000 in the 2024/25 tax year
From 6 April 2027: if it is over £30,000 in the 2025/26 tax year
From 6 April 2028: if it is over £20,000 in the 2026/27 tax year

HMRC checks your Self Assessment return each year and writes to you if you are above the threshold. If no letter arrives, it is still your responsibility to check whether you need to join.

Exemptions. Some people do not have to use Making Tax Digital. For VAT, the reasons include when it is not practical for you to use digital tools, insolvency, and businesses run entirely by practising members of certain religious societies. Income Tax has its own exemptions, such as digital exclusion. Check GOV.UK for how to claim an exemption rather than assume you have one.

What bridging software does

GOV.UK describes two kinds of compatible software. One kind creates your records for you, for example by pulling in bank transactions or scanning receipts. The other kind connects to records you already keep elsewhere, such as in a spreadsheet. That second kind is what people call bridging software.

Bridging software usually works like this:

You keep your income and expenses in your spreadsheet as normal
You point the bridging software at the spreadsheet, or at a summary tab within it
The software reads the totals and shows you what will be sent
You check the figures and submit them to HMRC from the software

The spreadsheet is still your record. The bridging software is the part that sends the figures to HMRC. HMRC has an online software finder you can use to find compatible software or check whether a product you already use works.

Digital links: the rule that matters most

A digital link is any transfer of data that happens electronically. Under Making Tax Digital, once a figure is in your digital records, it must move to the next stage by a digital link, all the way to HMRC.

What counts as a digital link

HMRC's guidance gives these examples:

Linked cells in spreadsheets
Emailing a spreadsheet so the data can be imported into another product
Passing records on a portable device, such as a USB stick, for someone else to import
Importing or exporting files, such as CSV or XML
Automated data transfer and API connections

What does not count

HMRC is clear that cut and paste or copy and paste does not count as a digital link. Nor does typing a figure out again, whether into another cell, another workbook or another program.

In practice this means your summary totals should come from formulas that point at the underlying entries. If you add up a column on a calculator and type the answer into a summary cell, that summary is no longer digitally linked.

An example to show the idea. This is made up. Imagine a self-employed decorator who keeps a spreadsheet with one tab for income and one for expenses. A third tab totals each category using formulas such as SUM and SUMIF that read the other two tabs. Their bridging software reads that third tab and submits the totals.

That chain is digital from end to end. Now imagine they keep receipts in a second workbook and copy the monthly total into the main one by hand. That single copy breaks the link. Replacing it with a formula that refers to the second workbook, or with a CSV import, fixes it.

What your spreadsheet must record

For Income Tax

Each digital record needs three things: the amount, the date the income was received or the expense was incurred, and a category. The categories you use depend on the type of business you have. If you use more than one product, the spreadsheet must be digitally linked to your bridging software before you send a quarterly update or your tax return.

For VAT

VAT Notice 700/22 sets out more detail. Your digital records should include:

Business details: your business name, principal place of business, VAT registration number and any VAT accounting schemes you use
Sales: for each supply, the time of supply, the value excluding VAT and the VAT rate charged
Purchases: for each supply, the time of supply, the value and the input tax you will claim
Summary data: totals of output tax, input tax and any adjustments

Retailers using a retail scheme must also keep a digital record of their daily gross takings.

Deadlines under Making Tax Digital for Income Tax

Quarterly updates are cumulative. Each one covers the tax year so far, from 6 April. The standard periods and deadlines are:

6 April to 5 July: update due by 7 August
6 April to 5 October: update due by 7 November
6 April to 5 January: update due by 7 February
6 April to 5 April: update due by 7 May in the following tax year

You then submit your tax return through the software by 31 January after the end of the tax year. GOV.UK says there are no penalties for missing a quarterly update deadline in the 2026/27 tax year. Penalty points for late updates apply to later tax years, and the tax return and payment deadlines still carry penalties.

VAT returns follow your normal VAT return periods. The difference is that they must be filed through compatible software, using figures that came from your digital records.

Is a spreadsheet the right choice?

Spreadsheets suit some businesses well. They can also become a weak point as the business grows.

When spreadsheets work

A small number of transactions each month
A simple business, such as one rental property or one trade
Someone who is careful with formulas and keeps the layout stable
You already know the bridging product reads your layout correctly

Where they cause trouble

Broken formulas. A row inserted in the wrong place can drop entries from a total without any warning.
Hand-typed totals. One pasted figure breaks the digital link.
No bank check. A spreadsheet does not tell you when a transaction is missing. Accounting software that reconciles to your bank feed does.
Corrections. Mistakes must be fixed in the spreadsheet itself and then flow through to the bridging software. Editing the figure only in the bridging product leaves your records out of step.
Version control. Several copies of the same workbook make it hard to know which one is the record.

Moving from spreadsheets to accounting software

If the spreadsheet is starting to creak, moving to software such as Xero, QuickBooks, Sage or FreeAgent removes most of the digital link worries. Bank transactions come in automatically, receipts are attached to each entry, and the submission happens from the same place the records live.

A good time to switch is at the start of a VAT period or a tax year, so one period is not split across two systems. Bring your opening balances across, keep the old spreadsheet as a record, and check the first quarter carefully before you submit.

A simple checklist

Every income and expense entry has a date, an amount and a category
Totals are built by formulas, not typed in
Nothing is copied and pasted between workbooks
Your bridging software reads the spreadsheet directly or by file import
Errors are corrected in the spreadsheet, then re-read by the software
You know your quarterly update or VAT return deadlines