Can I Still Use Excel for Making Tax Digital in the UK?

Yes, spreadsheets like Excel can still be used for Making Tax Digital for Income Tax Self Assessment (MTD ITSA) in the UK, provided they are digitally linked to HMRC through recognised bridging software. Manual re-keying of figures is not permitted.

Filing frequency: Quarterly Updates
Digital record keeping: Mandatory
Digital link requirement: Essential

For HMRC's own guidance, see HMRC MTD Guidance.

Introduction to Making Tax Digital and Spreadsheets

Making Tax Digital (MTD) represents a fundamental shift in how businesses and individuals manage and report their taxes to HMRC. Introduced initially for VAT, MTD is now extending to Income Tax Self Assessment (ITSA) for self-employed individuals and landlords. The core principle of MTD is to move tax administration into the digital age, requiring digital record keeping and regular digital updates to HMRC.

A common question arising from these changes is whether traditional record-keeping methods, particularly the use of spreadsheets like Excel, will still be permissible. The good news for many businesses and landlords accustomed to Excel is that HMRC guidance confirms spreadsheets can indeed remain a part of your MTD compliance strategy. However, this comes with a crucial caveat: a mandated 'digital link' must exist between your spreadsheet data and HMRC. This guide will delve into the specifics of using Excel for MTD ITSA, explaining the requirements, the role of bridging software, and how AccountsOS can streamline your compliance journey, whether you choose to integrate spreadsheets or transition to a full digital accounting solution.

What is Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA)?

Making Tax Digital for Income Tax Self Assessment (MTD ITSA) is HMRC's initiative to modernise the tax system, making it more efficient, more effective, and easier for taxpayers to get their tax right. It aims to reduce common errors and provide taxpayers with a clearer, more real-time view of their tax position.

The system requires individuals, including the self-employed and landlords, to keep digital records of their income and expenses and to send quarterly updates to HMRC directly from MTD-compatible software. This replaces the traditional annual Self Assessment tax return for income covered by MTD.

Key Principles of MTD ITSA:

Digital Record Keeping: All relevant business income and expenses must be recorded and stored digitally. This means no more shoeboxes of receipts or purely paper-based ledgers.
Quarterly Updates: Summary data of income and expenses must be submitted to HMRC every three months. These updates provide a cumulative picture of a business's financial activity throughout the tax year.
End of Period Statement (EOPS): After the final quarterly update, an EOPS must be submitted. This statement allows for any accounting adjustments, claims for allowances, and finalises the business's profits or losses for the tax year.
Final Declaration: This replaces the current Self Assessment tax return. It combines all income sources, including those not covered by MTD (such as PAYE income, pensions), and calculates the final tax liability for the year.

Why MTD ITSA? HMRC estimates that errors in Self Assessment cost the Exchequer billions each year. MTD aims to reduce this 'tax gap' by encouraging more accurate and timely record keeping, providing taxpayers with more frequent feedback on their tax position, and making it simpler to interact with HMRC.

The Role of Spreadsheets in MTD ITSA

For many small businesses and landlords, spreadsheets like Microsoft Excel have been the cornerstone of their financial record keeping for years. HMRC recognises this widespread use and has confirmed that spreadsheets can indeed continue to be used as part of your MTD ITSA solution. However, this is not a carte blanche to continue as before. The critical requirement is the establishment of a "digital link".

HMRC's Stance on Spreadsheets and Digital Links:

HMRC's guidance explicitly states that a spreadsheet can be used to record transactions digitally, but it cannot directly submit data to HMRC. Instead, the data from the spreadsheet must be transferred to HMRC via MTD-compliant software. This transfer must be fully digital, meaning no manual input, copying, or re-keying of data is allowed at any point between the spreadsheet and the MTD software, or between different parts of the overall digital record system.

The intention behind this rule is to eliminate human error that can occur during manual data entry, which is a significant source of tax inaccuracies. If you are using Excel, it must therefore integrate with a piece of "bridging software" that facilitates this digital transfer.

What Constitutes "Digital Record Keeping" in a Spreadsheet?

When using a spreadsheet for MTD ITSA, you must digitally record specific details for every business transaction. This includes:

Date of Transaction: The precise date when income was received or an expense was incurred.
Amount: The monetary value of the transaction.
Category: A clear categorisation of the income or expense, such as 'sales', 'rent', 'travel', 'utilities', etc. This helps in mapping to HMRC's required reporting categories.
Type: Whether it's income or an expense.

The spreadsheet itself acts as the digital record. However, the connection between this digital record and HMRC must also be digital. This is where bridging software becomes indispensable.

Crucial Point: While you can use a spreadsheet, the moment you need to transfer data for submission to HMRC, it must be through a digital link. Manually typing figures from your spreadsheet into another piece of software, or even copying and pasting, is not compliant with MTD rules.

Understanding Digital Links and Bridging Software

The concept of a "digital link" is central to MTD compliance when using spreadsheets. It refers to the electronic transfer of data without any manual intervention. This is distinct from simply having your records in a digital format.

What Constitutes a Digital Link?

A digital link is a transfer or exchange of data that is electronic, automated, and eliminates the possibility of human error during data movement. Examples of acceptable digital links include:

Formulas in Spreadsheets: If you use formulas to link cells or worksheets within a single spreadsheet, or between different spreadsheets, this counts as a digital link. For example, a formula that sums up expenses from multiple tabs.
Macros: Automated processes, such as macros in Excel, that extract, combine, or summarise data from your digital records are considered digital links.
Automated Data Transfer: This includes direct feeds from one software program to another, or API (Application Programming Interface) integrations that allow software to communicate and exchange data automatically.
Bridging Software: This is a specific type of software designed to take digital data from a non-MTD compliant source (like a spreadsheet) and submit it to HMRC in an MTD-compliant format. The bridging software itself creates the digital link for submission.

What is explicitly not a digital link is any process that involves manual re-keying or copying and pasting of figures from one place to another. This is because these manual steps introduce the risk of transcription errors, which MTD aims to eliminate.

What is Bridging Software and How Does it Work?

Bridging software is a vital tool for those who wish to continue using spreadsheets for their primary record keeping under MTD ITSA. Its purpose is to act as a conduit, taking the summarised digital data from your spreadsheet and securely transmitting it to HMRC in the required MTD format.

Typically, bridging software will:

Import Data: It will have a function to import data directly from your spreadsheet. This could be by reading specific cells, ranges, or by importing a CSV file generated from your spreadsheet. This import process must be digital.
Map Data: The software will map your spreadsheet's income and expense categories to HMRC's standard MTD categories.
Prepare Submission: It will then compile the data into the correct format for quarterly updates, EOPS, or Final Declarations.
Transmit to HMRC: Finally, it will establish a secure, digital connection with HMRC's MTD API to submit your figures.

AccountsOS, as a comprehensive MTD-compliant accounting software, goes beyond simply being bridging software. While it can facilitate the digital linking of your financial data, its primary function is to serve as a complete digital record-keeping and submission solution, often eliminating the need for separate spreadsheets and bridging tools entirely. By using AccountsOS, your records are inherently digital and MTD-compliant from the point of entry, ensuring a seamless and fully automated journey to HMRC.

Who is Affected by MTD ITSA? Key Dates and Thresholds

MTD ITSA will affect millions of self-employed individuals and landlords across the UK. It is being introduced in phases, based on the gross income generated from their businesses or property.

Mandatory Implementation Dates:

Gross income	Effective date	Description
£50,000 or more	April 2026	Mandatory for self-employed and landlords
£30,000 or more	April 2027	Mandatory for self-employed and landlords

The gross income threshold refers to the total turnover from all self-employment businesses and property income combined. If this combined income exceeds the threshold in a given tax year, you will be mandated to comply with MTD ITSA from the start of the following tax year.

Partnerships:

General partnerships will be brought into MTD ITSA at a later date, which is yet to be announced by HMRC. Other types of partnerships, such as Limited Liability Partnerships (LLPs), will also follow later.

Exemptions from MTD ITSA:

While MTD ITSA is becoming mandatory for many, certain individuals or businesses may be exempt. These exemptions typically apply to those who are genuinely unable to comply digitally, such as:

Digital Exclusion: Individuals who are unable to use digital tools due to age, disability, or location (e.g., no internet access).
Religious Objections: For those whose religious beliefs are incompatible with the use of electronic communications.
Insolvency: Individuals who are subject to insolvency procedures.

If you believe you qualify for an exemption, you must apply to HMRC. It is important not to assume an exemption applies without confirmation.

Digital Record Keeping Requirements for MTD ITSA

The cornerstone of MTD ITSA is the requirement to keep digital records. This means that for any business or property income subject to MTD, all relevant transactions must be recorded and stored electronically from the start of your MTD accounting period.

What Information Must Be Recorded Digitally?

For each business, including self-employment and property businesses, you must digitally record specific details for every transaction. These include:

Business Name and Description: For each separate business.
Date of Transaction: The specific date an income or expense item occurred.
Amount: The full value of the income or expense.
Category: An appropriate categorisation of the income or expense, aligning with HMRC's reporting requirements (e.g., sales, rental income, advertising, travel, stationery, utilities, repairs, interest payable).
Type of Transaction: Clearly distinguishing between income and expense.

While you do not need to scan and store copies of every invoice or receipt digitally for MTD purposes, you must still retain these physical or digital source documents for the usual statutory period (typically 6 years) to support the figures in your digital records, should HMRC request them.

Maintaining Digital Records with Spreadsheets:

If you opt to use a spreadsheet, it must be capable of recording all the required information in a structured format. This usually means having dedicated columns for date, description, category, income, and expenses. You might use separate tabs for different types of income or expense, or for different businesses if you have more than one.

The key is that the data must be entered digitally into the spreadsheet from the outset. For example, if you receive a bank statement, you would manually input the transactions into your spreadsheet. However, if your bank offers a downloadable CSV file of transactions, importing this directly into your spreadsheet would be a more robust digital link.

Importance of Accuracy and Audit Trail:

Digital record keeping under MTD ITSA places a strong emphasis on accuracy and maintaining a clear audit trail. Your records should allow HMRC, or your accountant, to easily trace the journey of a transaction from its source document through to its inclusion in your MTD submissions.

AccountsOS simplifies this process by providing a secure, cloud-based platform for all your digital records. It automates much of the data entry through bank feeds, categorises transactions intelligently, and maintains a comprehensive audit trail, ensuring compliance and peace of mind.

Advantages and Disadvantages of Using Spreadsheets for MTD ITSA

While spreadsheets offer flexibility and familiarity, it is crucial to weigh their pros and cons carefully when considering them as your primary MTD ITSA record-keeping tool.

Advantages of Spreadsheets:

Familiarity and Ease of Use: Many self-employed individuals and landlords are already proficient in using Excel or similar spreadsheet software. This reduces the learning curve associated with new accounting software.
Cost-Effective (Initially): If you already own spreadsheet software, the direct cost of using it for MTD record keeping is minimal, though you will still need to invest in bridging software.
Flexibility: Spreadsheets offer a high degree of customisation. You can set up your columns, formulas, and reporting views exactly as you prefer, tailoring them to your specific business needs.
Suitable for Simple Affairs: For businesses or landlords with a very low volume of transactions and straightforward income/expense categories, a well-managed spreadsheet can be sufficient for digital record keeping.

Disadvantages of Spreadsheets:

Risk of Manual Errors: Despite the digital link requirement for submission, the initial data entry into a spreadsheet is often manual. This increases the potential for human error, typos, and miscategorisations, which can lead to incorrect tax calculations and penalties.
Lack of Automation: Spreadsheets typically require manual updates for bank transactions, reconciliation, and summarisation. This can be time-consuming, especially as your business grows. Dedicated software often offers bank feeds and automated categorisation.
Digital Link Complexity: Ensuring a true digital link with bridging software can be complex to set up and maintain. Any break in the digital chain can lead to non-compliance.
Limited Reporting and Insights: While you can create reports in Excel, dedicated accounting software provides more sophisticated, real-time financial reporting, cash flow forecasts, and business insights that spreadsheets often lack.
Scalability Issues: As your business grows, so does the volume and complexity of your transactions. Managing this in a spreadsheet can quickly become unwieldy, inefficient, and prone to errors.
Security and Version Control: Spreadsheets can be vulnerable to data loss or corruption if not backed up regularly. Sharing and version control can also be challenging, particularly when working with an accountant.
No Direct MTD Submission: Spreadsheets cannot directly submit to HMRC. They always require an additional piece of bridging software, adding another layer of cost and complexity.

For many, the initial cost saving of using Excel is quickly outweighed by the time commitment, risk of errors, and lack of advanced features compared to dedicated MTD-compliant accounting software.

The MTD ITSA Reporting Cycle: Quarterly Updates, EOPS, and Final Declaration

Understanding the MTD ITSA reporting cycle is crucial for compliance, whether you use spreadsheets or full accounting software. It involves more frequent submissions than the traditional annual Self Assessment.

1. Quarterly Updates (Income and Expenses)

Every three months, you must send HMRC a summary of your business's income and expenses. These updates are cumulative, meaning each submission builds on the previous one for the tax year.

Quarterly Updates: Summary of income and expenses for each business. Deadline: Within 1 month of quarter end.

The deadlines for quarterly updates are fixed, regardless of your business's accounting period end. For a tax year running from 6 April to 5 April, the quarterly periods and their deadlines are:

Quarter period	Deadline for submission
6 April to 5 July	5 August
6 July to 5 October	5 November
6 October to 5 January	5 February
6 January to 5 April	5 May

2. End of Period Statement (EOPS)

After your final quarterly update for the tax year, you must submit an End of Period Statement (EOPS) for each business. This statement allows for any necessary accounting adjustments and claims for allowances.

End of Period Statement (EOPS): Adjustments, claims, and final figures for each business. Deadline: 31 January after tax year.

Adjustments typically include:

Capital allowances (e.g., Annual Investment Allowance).
Stock adjustments.
Private use adjustments (for expenses with a personal element).
Business expenses not yet included in quarterly updates.

3. Final Declaration

The Final Declaration replaces the traditional Self Assessment tax return. This is where all your income sources, including those not covered by MTD ITSA (like PAYE employment, pensions, bank interest), are brought together.

Final Declaration: Combines business income with other income sources, declares overall tax liability. Deadline: 31 January after tax year.

The deadline for both the EOPS and the Final Declaration is 31 January following the end of the tax year. For example, for the tax year 2026-2027 (ending 5 April 2027), the EOPS and Final Declaration would be due by 31 January 2028.

Worked Example: Quarterly Update for a Self-Employed Sole Trader. Let's assume a sole trader, Jane, whose MTD ITSA period begins on 6 April 2026.

Quarter 1 (6 April 2026 to 5 July 2026): Total income £7,500. Total expenses £2,000 (e.g., £500 travel, £800 materials, £700 utilities). Jane would use her spreadsheet to record these individual transactions. Her bridging software would then digitally extract the summarised figures (£7,500 income, £2,000 expenses) and submit them to HMRC by 5 August 2026.
Quarter 2 (6 July 2026 to 5 October 2026): Total income £9,000. Total expenses £2,500 (e.g., £600 advertising, £1,000 subcontractor, £900 rent). Jane again records these in her spreadsheet. The bridging software submits the cumulative figures: Total Income £16,500 (£7,500 + £9,000), Total Expenses £4,500 (£2,000 + £2,500) by 5 November 2026.

This process continues for all four quarters, providing HMRC with a rolling view of Jane's business performance.

Choosing Your MTD ITSA Solution: Spreadsheets vs. Full Software

Deciding whether to stick with spreadsheets and bridging software or transition to a full MTD-compliant accounting package is a significant choice for your business. The best option depends on the complexity of your financial affairs, your technical comfort level, and your desire for automation and insights.

When Spreadsheets Might Be Suitable:

Very Low Transaction Volume: If you have only a handful of income and expense transactions each month, manual entry into a spreadsheet might be manageable.
Simple Business Structure: A sole trader with one straightforward income stream and minimal expenses might find a spreadsheet sufficient.
Budget Constraints (Initial): If upfront cost is a major concern, leveraging existing spreadsheet software might seem appealing, though bridging software will add a cost.
High Spreadsheet Proficiency: If you are an expert in Excel and can build robust, error-free spreadsheets with complex formulas and macros for digital linking.

When Full Accounting Software Becomes Essential:

For most businesses and landlords, particularly as they grow or have more complex financial situations, dedicated MTD-compliant accounting software like AccountsOS offers significant advantages:

Automation and Efficiency: Bank feeds automatically import transactions, reducing manual data entry. AI-powered categorisation saves time and minimises errors.
Guaranteed Digital Links: Full software is built from the ground up to be MTD compliant, ensuring all record keeping and submissions are digitally linked without the need for additional bridging software.
Accuracy and Error Reduction: Automated reconciliation, error detection, and pre-set tax categories significantly reduce the risk of mistakes that could lead to penalties.
Real-Time Financial Insights: Access to up-to-date reports, profit and loss statements, and cash flow projections allows for better business decision-making. AccountsOS provides real-time tax estimates.
Scalability: As your business expands, dedicated software can easily handle increased transaction volumes, multiple income streams, and additional reporting requirements.
Collaboration with Accountants: Cloud-based accounting software allows seamless collaboration with your accountant, who can access your records, provide advice, and assist with submissions directly.
Security and Backups: Reputable accounting software providers offer robust security, regular backups, and ensure data integrity, which can be a concern with self-managed spreadsheets.
Integrated Tax Compliance: Many software solutions, like AccountsOS, not only handle MTD ITSA but can also integrate with VAT, Corporation Tax, and other compliance requirements, providing a holistic view of your tax obligations.

While spreadsheets can meet the minimum MTD ITSA requirements with bridging software, they often lack the efficiency, automation, and advanced features that modern businesses need to thrive and remain compliant with minimal effort. AccountsOS is designed to simplify MTD compliance and provide comprehensive financial management.

Compliance and Penalties for MTD ITSA Non-Compliance

HMRC has introduced a new penalty regime for MTD ITSA to encourage timely and accurate submissions. This system differs from the previous penalties for annual Self Assessment.

Points-Based Penalty System for Late Submissions:

Instead of immediate fines, HMRC will operate a points-based system for late submissions of quarterly updates, EOPS, and the Final Declaration.

Points Accumulation: For each late submission, you will receive one point.
Penalty Trigger: Once you reach a certain number of points (e.g., 4 points for quarterly submissions), you will incur a £200 penalty.
Further Penalties: An additional £200 penalty may be issued for every further late submission once the penalty threshold has been reached.
Points Expiry: Points expire after a period of good compliance (e.g., 12 months for quarterly submissions, 24 months for annual submissions).

Penalties for Late Payments:

Interest will be charged on any tax paid late. Additionally, penalties may be applied for significantly overdue payments:

15 days late: First penalty of 2% of the tax due.
30 days late: Second penalty of 2% of the tax due.
After 30 days: Daily penalties of 4% per year on the unpaid amount.

Penalties for Inaccurate Records:

HMRC can also issue penalties for inaccuracies in your tax returns if they are due to a lack of reasonable care, deliberate action, or deliberate concealment. These penalties can range from 0% to 100% of the additional tax due, depending on the severity and intent.

Furthermore, a specific penalty for 'Failure to Keep Digital Records' can be applied if you do not comply with the digital record-keeping requirements. This penalty can be up to £3,000 for serious and persistent failures.

Avoiding Penalties: The best way to avoid MTD ITSA penalties is to ensure your records are kept digitally and accurately, and that all submissions are made on time using MTD-compliant software or bridging software with a robust digital link. AccountsOS helps you stay compliant by providing automated reminders, real-time tax estimates, and seamless submission capabilities.

Step-by-Step Guide: Preparing Your Spreadsheet for MTD with Bridging Software

If you've decided to continue using Excel for your MTD ITSA record keeping, it is essential to set up your spreadsheet correctly and understand the process for submitting data via bridging software.

Step 1: Design Your Spreadsheet for Digital Record Keeping

Essential Columns: Create clear columns for: Date, Description, Income Amount, Expense Amount, Category (e.g., Sales, Rent, Travel, Utilities), and optionally a "Business" column if you have multiple income sources.
Consistent Categorisation: Use a consistent list of categories for your income and expenses that can be easily mapped to HMRC's reporting requirements.
Separate Worksheets: Consider using separate worksheets for different types of income (e.g., self-employment, property) or different businesses. Use formulas to summarise totals on a main "Summary" sheet.
Data Integrity: Implement data validation rules to minimise entry errors (e.g., ensuring dates are entered in a specific format).

Step 2: Record Your Income and Expenses Digitally

Timely Entry: Enter transactions into your spreadsheet as they occur, or at least regularly (e.g., weekly or monthly), to avoid a backlog.
Digital Source Data: Where possible, import data digitally (e.g., bank statement CSV files) rather than manual entry. If manual entry is necessary, ensure it is accurate.
Reconciliation: Regularly reconcile your spreadsheet records with your bank statements to ensure all transactions are captured and accounted for.

Step 3: Prepare Data for Bridging Software (Quarterly)

Summarise Quarterly Figures: For each quarterly period (e.g., 6 April to 5 July), use formulas in your spreadsheet to calculate the total income and total expenses for each category. These summary figures must be derived digitally.
Bridging Software Compatibility: Understand the specific data format required by your chosen bridging software. Some may accept a direct link to a spreadsheet, others may require data to be exported to a CSV file.
Digital Transfer: Ensure the transfer of these summary figures from your spreadsheet to the bridging software is a digital link. This means using a formula, a macro, or a direct import function within the bridging software. No copy-pasting or manual typing of totals.

Step 4: Submit via Bridging Software

Review Data: Before submission, carefully review the figures pulled into the bridging software to ensure they match your spreadsheet summaries.
Authorise Submission: Connect the bridging software to your HMRC online account and authorise the submission of your quarterly update.
Confirmation: Retain confirmation of your submission from the bridging software and HMRC.

This process is repeated for each quarterly update. For the EOPS and Final Declaration, your spreadsheet will need to contain the full tax year's data, which will then be transferred digitally to the bridging software for final adjustments and submission.

AccountsOS: Your MTD ITSA Compliance Partner

While spreadsheets can be part of an MTD ITSA solution with bridging software, AccountsOS offers a more integrated, efficient, and reliable path to compliance. We provide a comprehensive accounting platform designed to meet and exceed HMRC's MTD requirements, eliminating the complexities of managing multiple systems or ensuring digital links between disparate tools.

How AccountsOS Simplifies MTD ITSA:

Built-in Digital Record Keeping: AccountsOS is MTD-compliant from the ground up. All your income and expenses are recorded digitally within the platform, ensuring a complete and accurate audit trail.
Automated Bank Feeds: Connect your bank accounts for automatic import of transactions. This drastically reduces manual data entry and ensures all financial activity is captured.
Intelligent Categorisation: Our AI-powered categorisation learns from your habits, helping you quickly and accurately assign transactions to the correct HMRC categories.
Seamless Quarterly Updates: Generate and submit your MTD ITSA quarterly updates directly from your reconciled AccountsOS data with just a few clicks. No need for separate bridging software.
Real-Time Tax Estimates: See your estimated income tax liability update in real time as you record transactions, allowing you to plan ahead and avoid surprises.
EOPS and Final Declaration Support: AccountsOS streamlines the process of preparing your End of Period Statement and Final Declaration, ensuring all necessary adjustments and other income sources are correctly accounted for.
Secure Cloud-Based Platform: Your financial data is securely stored in the cloud, accessible anytime, anywhere, with robust backups and version control.
Accountant Collaboration: Easily invite your accountant to access your AccountsOS data, simplifying year-end processes and ongoing advice.

By choosing AccountsOS, you not only ensure full MTD ITSA compliance but also gain a powerful tool that saves you time, reduces stress, and provides valuable insights into your business's financial health. Transitioning away from manual spreadsheet management frees you to focus on what you do best: running your business.

Simplify Your MTD ITSA Journey with AccountsOS

AccountsOS streamlines your digital record keeping and HMRC submissions, whether you're a self-employed individual or a landlord.

Seamless Digital Links

AccountsOS ensures all your records are digitally linked to HMRC, removing the need for bridging software.

Automated Quarterly Updates

Generate and submit your MTD ITSA quarterly updates directly from your reconciled data.

Real-Time Tax Estimates

See your estimated tax liability update throughout the year, based on your digital records.

Simplified EOPS & Final Declaration

AccountsOS helps prepare the figures needed for your End of Period Statement and Final Declaration.

Frequently asked questions

Do I need to buy new software for MTD ITSA?

Not necessarily. If you use spreadsheets, you will need 'bridging software' to digitally link them to HMRC. AccountsOS offers a full MTD-compliant solution that eliminates the need for separate bridging tools.

What if my gross income is below the MTD threshold?

If your gross income is below the current threshold (£50,000 from April 2026, £30,000 from April 2027), you are not mandated to join MTD ITSA, but you can opt in voluntarily.

Can my accountant handle my MTD ITSA submissions for me?

Yes, your accountant can submit your MTD ITSA updates on your behalf, provided they use MTD-compliant software and you have authorised them to act for you. However, you are still responsible for keeping digital records.

What counts as a 'digital link'?

A digital link is an electronic transfer of data, such as a formula in a spreadsheet, a macro, or an automated data feed. Manual re-entry or 'copy and paste' between systems is not considered a digital link.

What records do I need to keep digitally for MTD ITSA?

You must digitally record all income and expenses for each business, including the date, amount, category, and type of transaction. This applies to both self-employment income and property income.

What is bridging software?

Bridging software is a digital tool that takes data from non-MTD compliant software, like a spreadsheet, and translates it into a format that can be submitted digitally to HMRC, fulfilling the 'digital link' requirement.

Is MTD ITSA just for self-employed individuals?

No, MTD ITSA applies to both self-employed individuals and landlords with qualifying gross income from their businesses or property. Partnerships will be included at a later date.

What if I have multiple income sources?

For MTD ITSA, you need to keep separate digital records and submit quarterly updates for each self-employment business and property business. Other income sources, such as PAYE employment, are declared in the Final Declaration.