MTD Bridging Software: What It Is and Why You Might Need It

If you’re a self-employed person or landlord who tracks income and expenses in Excel, you’ve probably heard about Making Tax Digital and wondered what it means for you. The good news is you don’t necessarily need to abandon your spreadsheet and learn complex accounting software. MTD bridging software offers a simpler path—one that lets you keep working the way you already do while meeting HMRC’s new digital requirements.

Understanding the basics of bridging software

Making Tax Digital for Income Tax becomes mandatory from April 2026 for self-employed individuals and landlords earning over £50,000 annually. Those earning over £30,000 follow in 2027, and the threshold drops to £20,000 by 2028. Under these rules, you’ll need to keep digital records and submit quarterly updates to HMRC, followed by a Final Declaration at year-end.

Here’s where bridging software comes in. It acts as a digital connector between your existing spreadsheet and HMRC’s systems. Rather than replacing your record-keeping method, it simply reads the figures you’ve already entered in Excel or Google Sheets and transmits them electronically to HMRC via their official API (application programming interface). Think of it as a translator: you speak spreadsheet, HMRC speaks API, and bridging software handles the conversation between the two.

The key technical requirement is what HMRC calls a “digital link”—an electronic transfer of data without manual re-entry. When your spreadsheet links to bridging software and that software connects to HMRC, you’ve created a compliant digital chain. Copying and pasting figures doesn’t count. But linking cells, importing CSV files, or using an API connection absolutely does.

HMRC has explicitly confirmed that spreadsheets combined with bridging software satisfy MTD requirements. In their own words, bridging software “can connect to your spreadsheets and make your submissions to HMRC.” This isn’t a loophole or temporary workaround—it’s a legitimate, long-term compliance option.

Who bridging software works best for

Bridging software isn’t for everyone, but for many self-employed people and landlords, it’s the sensible choice. You’re likely a good candidate if you already use Excel or Google Sheets and your system works well for you. Perhaps you’ve built a spreadsheet over the years that perfectly captures your income streams, categorises expenses the way you think about them, and gives you exactly the view of your finances you need.

People with straightforward tax affairs often find bridging ideal. If you’re a freelancer with a few clients, a landlord with one or two properties, or a sole trader with predictable income and expenses, you probably don’t need invoicing systems, automated bank feeds, or inventory management. You need to track what comes in, what goes out, and send the right numbers to HMRC.

Bridging also appeals to those who value control and transparency. With a spreadsheet, you understand exactly what’s being calculated and submitted. There’s no black box—just cells, formulas, and figures you’ve entered yourself. For people who find comfort in that clarity, switching to software that automates everything behind the scenes can feel like giving up visibility into their own finances.

If learning new software feels daunting or simply unnecessary, bridging lets you avoid that entirely. The setup typically takes minutes rather than hours, and your day-to-day process stays unchanged.

Two paths to MTD compliance

When it comes to meeting MTD requirements, you essentially have two options: full accounting software or bridging software. Understanding the difference helps you make the right choice.

Full accounting software like Xero, QuickBooks, FreeAgent, and Sage are comprehensive business management platforms. They handle invoicing, automatically import bank transactions, scan receipts using OCR technology, generate reports and dashboards, calculate VAT, manage payroll, track projects, and much more. These are powerful tools designed to run an entire business’s financial operations. Prices typically range from £7 to £65 per month depending on features and provider, with most useful plans falling between £15 and £35 monthly.

Bridging software does one thing: connect your spreadsheet to HMRC. It doesn’t create invoices, import bank statements, or generate profit-and-loss reports. It reads the figures from your spreadsheet and submits them digitally. That’s it. Pricing typically runs £40 to £50 per year, with some options even cheaper.

The question isn’t which approach is objectively better—it’s which one fits your situation. If you issue dozens of invoices monthly, want transactions pulled automatically from your bank, and need real-time cash flow visibility, full accounting software earns its subscription cost. But if your financial life is simpler, you may be paying for features you’ll never use.

The honest case for keeping it simple

Full accounting software is excellent for businesses that need it. But for many self-employed individuals and landlords, it represents significant overkill—and that comes with real costs beyond the monthly subscription.

You’re paying for features you don’t need. That £20 monthly subscription includes invoicing automation, bank feeds, receipt scanning, multi-user access, and integrations with hundreds of third-party tools. If you send a handful of invoices by email and track twenty expenses a month in a spreadsheet, those features provide zero value while draining £240 annually from your pocket.

Complexity has a learning cost. Accounting platforms are designed for small-to-medium businesses with varied needs. Learning to navigate menus, understand terminology, set up bank connections, and configure categories takes time—time you could spend on your actual work. Some platforms require accounting knowledge to use effectively, and many users report weeks of adjustment before feeling comfortable.

Your data lives in someone else’s ecosystem. When your financial records exist within a proprietary platform, exporting them completely and switching providers isn’t always straightforward. Bank feeds need reconnecting, integrations break, and historical data may not transfer cleanly. With a spreadsheet, your data sits on your own computer or cloud storage, in a format you fully control.

Simplicity isn’t the enemy of compliance. HMRC requires digital records and digital submission. They do not require any specific software, any particular level of automation, or any features beyond the core ability to submit data electronically. A well-maintained spreadsheet connected to bridging software meets every requirement fully.

Addressing the common concerns

If bridging software sounds appealing, you may have encountered arguments against it. Let’s address these directly.

“Manual entry increases error risk.” This concern misses the point. You’re already doing manual entry—into your spreadsheet. Bridging software doesn’t add another manual step; it automates the submission of figures you’ve already recorded. If anything, reviewing numbers in a spreadsheet before submission is easier than interpreting reports from complex software. And quality bridging tools include validation checks to catch obvious errors before submission.

“It’s not as automated.” True. But automation is only valuable if you need it. Bank feeds and automatic categorisation add convenience for businesses processing many transactions. If you have a handful of income sources and a manageable number of expenses, manual tracking takes minutes and keeps you closely connected to your financial reality. Automation adds complexity and cost that may not benefit you.

“You’ll have to switch eventually.” This claim, often promoted by full accounting software providers, is simply incorrect. HMRC has explicitly stated they have “no plans to stop supporting bridging solutions.” The digital links requirement allows for spreadsheets with bridging software indefinitely. Multiple bridging providers are already developing solutions for the upcoming MTD for Income Tax quarterly submissions, ensuring this approach remains viable as requirements expand.

“Spreadsheets are error-prone.” Spreadsheets can contain errors—so can accounting software if you enter wrong figures. The difference is visibility. In a spreadsheet, mistakes are typically easier to spot and correct. You can see every number, trace every formula, and verify calculations yourself. Many accountants actually prefer spreadsheets for simple affairs precisely because the working is transparent.

What to look for in bridging software

If you decide bridging software fits your needs, here’s what matters when choosing a provider.

HMRC recognition is non-negotiable. Only use software that appears on HMRC’s official list of compatible products. This confirms the provider has been tested and approved to handle submissions properly. Using unrecognised software risks compliance issues.

Spreadsheet compatibility matters. Ensure the software works with your specific setup—whether that’s Excel 2016, Office 365, or Google Sheets. Some bridging tools work as Excel add-ins; others import data from saved files. Choose one that fits your workflow.

Look for validation and error checking. Good bridging software should flag obvious problems before submission—blank required fields, unusual figures, format errors. This provides a safety net that catches issues before they reach HMRC.

Understand the pricing model. Some providers charge per submission, others offer annual subscriptions. Calculate which makes sense for your filing frequency. For quarterly MTD submissions, annual subscriptions typically offer better value.

Confirm support for your needs. For MTD Income Tax, you’ll need software that handles quarterly updates and Final Declarations, not just VAT returns. Check that your chosen provider covers everything required.

Making your decision

Bridging software is likely right for you if your tax affairs are relatively straightforward, you already have a spreadsheet system that works, you want to minimise costs and complexity, and you prefer understanding exactly what’s being submitted to HMRC.

Full accounting software might serve you better if you want automated bank reconciliation, issue many invoices and need payment tracking, have complex multi-entity affairs, or genuinely benefit from integrated reporting and business insights.

Neither choice is wrong—they simply serve different needs. The key is honest self-assessment about what you actually require versus what sounds impressive but adds no practical value to your situation.

A path forward

For self-employed individuals and landlords who want MTD compliance without unnecessary complexity, bridging software offers a practical, HMRC-approved solution. You can maintain the spreadsheet workflow you know, avoid monthly software subscriptions for features you’ll never use, and meet every digital requirement confidently.

Calceum is designed for exactly this purpose—a focused bridging tool that connects your Excel spreadsheets to HMRC without the feature bloat of full accounting packages. If you value simplicity, control, and keeping more money in your pocket rather than paying for software capabilities you don’t need, it’s worth exploring. Sometimes the smartest technology choice is the one that changes the least about how you already work.