The short answer
Yes. A spreadsheet counts as a digital record for Making Tax Digital for Income Tax when you use it with compatible software that sends your quarterly updates. That software is called bridging software. Your figures must move from the spreadsheet to the software digitally, for example by uploading a file. Retyping them by hand does not count.
What counts as a digital record?
Making Tax Digital for Income Tax asks you to keep a digital record of each business transaction. For each one, record the date, the amount and the category of income or expense.
The record can live in a spreadsheet. HMRC does not require you to move your bookkeeping into new software. You need software that can send your quarterly updates and your tax return to HMRC.
- The date of each transaction
- The amount
- Which type of income or expense it is
What is a digital link?
A digital link is how figures move from one digital place to another without being typed in again. Once your records are digital, every step to HMRC has to stay digital.
Formulas that link cells in a spreadsheet count. So does saving a file and uploading it to your software. Reading a total off one screen and typing it into another does not count.
- Counts: a SUM or SUMIF formula that adds up your transactions
- Counts: saving your sheet as a CSV file and uploading it
- Does not count: retyping a total into another spreadsheet or into software
Excel, Google Sheets and Numbers
Any spreadsheet that can save a CSV file works. CSV stands for comma-separated values. It is a plain file of rows and columns that software can read.
- Excel: File, Save As, then CSV (Comma delimited)
- Google Sheets: File, Download, then Comma-separated values (.csv)
- Numbers: File, Export To, then CSV
- LibreOffice Calc: File, Save As, then Text CSV
What does bridging software do?
Bridging software connects your spreadsheet to HMRC. It reads the figures from your file, shows you what HMRC will receive, and sends your quarterly update through HMRC’s Making Tax Digital service.
With SimpleTaxFlow you upload one CSV file for each business and tax year, with your totals for the tax year so far. Uploading again replaces the last upload. You can also add income and expenses in Money for free if you would rather not keep a spreadsheet.
Read more about SimpleTaxFlow as MTD bridging software at /features/mtd-bridging-software.
Example
Sam is a self-employed decorator (fictional). He keeps every job and every cost on one Google Sheet. A second tab adds them up with SUMIF formulas. At the end of the quarter he downloads that tab as a CSV file and uploads it. His income of £12,480 and expenses of £2,741 reach HMRC without being typed in again.
1. Upload your spreadsheet for a quarterly update
Follow our step-by-step guide to save your spreadsheet as CSV, upload it, check the figures and send your update.
Read the upload guideBefore you move on
- Keep a record of each transaction with its date, amount and category
- Link totals to your transactions with formulas
- Upload a file rather than retyping figures
- Bookkeeping is free. Sending to HMRC costs £29.99 + VAT a year
Frequently asked questions
Can I keep using Excel for Making Tax Digital?
Yes. Keep your records in Excel and use bridging software to send your quarterly updates. Save the sheet as a CSV file and upload it, so the figures are not retyped.
Can I use Google Sheets for Making Tax Digital?
Yes. Download the sheet as a CSV file and upload it. Numbers and LibreOffice work the same way.
Do I need to record every transaction, or just totals?
Keep a record of each transaction. Your quarterly update then sends totals worked out from those records.
Check the official rules
Tax rules can change and individual circumstances matter. Use HMRC’s current guidance to confirm the treatment that applies to you.
Put the guide into practice.
Open the relevant workspace and complete the next step with this guide available in another tab.
Continue learning