Bridging software for MTD

Q: What does a compliant bridging set up look like?

Illustration only. Tom is a landlord with three UK flats and keeps a spreadsheet with one tab per flat. Each row has the date, amount and Self Assessment category. A totals tab uses formulas to add up each category across the three tabs. His agent's bridging product is mapped to the totals tab and sends the quarterly update. Compliant: the flat tabs feed the totals tab by formula, and the bridge reads the totals tab directly. Not compliant: Tom copies the totals into a new workbook each quarter, or his agent retypes them into the bridge. Correction: a missed repair invoice from June is added to the right flat tab in September, flows through the formulas, and is included in the second quarterly update.

Bridging software is a product that connects existing records, usually a spreadsheet, to HMRC’s Making Tax Digital systems so that quarterly updates and returns can be sent without moving to a full bookkeeping package. It is allowed for both VAT and Income Tax, but only if the spreadsheet and the bridging product together meet the definition of compatible software and every transfer of data between them is a digital link rather than retyping or copy and paste.

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What is bridging software?

HMRC’s guidance on choosing software for Making Tax Digital for Income Tax describes two types of product: software that creates digital records, and software that connects to records kept elsewhere, such as spreadsheets or other accounting tools. The second type is what HMRC calls bridging software. VAT Notice 700/22, paragraph 3.2.3, describes bridging software as a digital tool that incorporates the Making Tax Digital application programming interfaces (APIs) needed to connect accounting software to HMRC, so information can be reported digitally and HMRC can communicate digitally with the business. The same notice recognises API enabled spreadsheets, which have the APIs built in.

HMRC’s first year guidance for Income Tax confirms that someone who keeps records in spreadsheets can continue to do so, but still needs software that links to the spreadsheet to send quarterly updates and submit the return.

Why is a spreadsheet plus bridge treated as compatible software?

For Income Tax, regulation 3 of the Income Tax (Digital Obligations) Regulations 2026 (SI 2026/336) defines functional compatible software as a program that can give quarterly updates, deliver returns and amendments, keep and correct digital records, and receive information from HMRC through the API platform. A “program” can be a set of programs, provided that once data has been recorded in one of them, amending or accessing it in any of the others does not require the user to record it again. A spreadsheet that holds the records and a bridge that reads them can therefore form one compliant set, but only if nothing is rekeyed between them.

VAT Notice 700/22, paragraph 3.2, takes the same approach for VAT: a spreadsheet that cannot submit returns can still be a component of functional compatible software when used with other programs that perform the missing functions.

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What must the spreadsheet itself contain?

HMRC’s guidance on creating digital records says each record of self employment or property income or expense needs the amount, the date it was received or incurred, and a category, using the same categories as Self Assessment. Practical points for a spreadsheet:

A separate set of records and separate quarterly updates is needed for each trade.
All UK properties form one UK property business and can share one set of records; foreign properties need a record for each property, which the software then combines.
Where turnover from a trade or from UK property is below £90,000, HMRC allows simpler categorisation of records as just income or expense, but residential landlords must still separately identify finance costs such as mortgage interest.
Retailers can record daily gross takings instead of each sale.

Records must be created before the quarterly update deadline for that period, or before the update is sent if earlier. Our page on digital receipts and records covers keeping the supporting documents.

How does the link between spreadsheet and bridge work?

The bridge reads the spreadsheet, usually by mapping cells or ranges to HMRC categories, and sends the totals through the API. Within the spreadsheet, HMRC accepts formulas that mirror a value in another cell as a digital link. HMRC’s Income Tax guidance also accepts importing and exporting files such as CSV or XML, and emailing a spreadsheet so the data can be imported into another product.

What breaks the chain is manual handling once a record exists. HMRC says that once a digital record has been created and sent to HMRC in a quarterly update, it must not be moved manually within the record keeping software or to other software, for example by writing it out again in another cell or by cutting or copying and pasting. A summary tab where someone types in totals, rather than calculating them with formulas, is the classic failure. The wider rules are explained in digital links under Making Tax Digital.

Can bridging software handle the whole year?

Not always. HMRC says some bridging products can send quarterly updates and submit the tax return, which implies others cannot. The software, or the set of products used, must:

support every income source the client has under Making Tax Digital;
send quarterly updates and submit the tax return;
let the user report all other income, such as dividends and savings interest, to complete the return;
work with the client’s accounting period, including calendar update periods for a 31 March year end.

More than one product may be used, for example one for records and quarterly updates and another for the return, but HMRC says only one product can be used for each separate submission. Software used only to submit the return does not need a digital link to the record keeping software, because it takes the data from HMRC. HMRC lists products that have passed its recognition process in its software finder, but does not recommend any product.

How are errors corrected when records live in a spreadsheet?

HMRC’s guidance says that if records are kept in separate record keeping software such as a spreadsheet, the correction should be made there and the records then digitally linked to the bridging software again. During the year the corrected figures flow into the next quarterly update, because each update is cumulative from the start of the tax year. After the fourth update the user can either correct the record and resend the fourth update, or adjust the category total in the software and reflect it in the records. Regulation 17 of SI 2026/336 requires errors in digital records to be corrected as soon as possible.

What does a compliant bridging set up look like?

Illustration only. Tom is a landlord with three UK flats and keeps a spreadsheet with one tab per flat. Each row has the date, amount and Self Assessment category. A totals tab uses formulas to add up each category across the three tabs. His agent’s bridging product is mapped to the totals tab and sends the quarterly update.

Compliant: the flat tabs feed the totals tab by formula, and the bridge reads the totals tab directly.
Not compliant: Tom copies the totals into a new workbook each quarter, or his agent retypes them into the bridge.
Correction: a missed repair invoice from June is added to the right flat tab in September, flows through the formulas, and is included in the second quarterly update.

What else should agents check?

Bridging software must be authorised with HMRC. An agent connects using the firm’s agent services account credentials and an identity check, and HMRC says this must be repeated every 18 months. If the business is also VAT registered, HMRC suggests checking whether the existing VAT software or bridge also works for Income Tax. Firms comparing products may find our page on practice management software useful, and the VAT side is covered in Making Tax Digital for VAT.

Where do bridging set ups usually go wrong?

Typed in summary figures rather than formulas between tabs or workbooks.
Pasting bank statement data into the records after a quarter has been submitted, rather than importing it as a file.
A bridge that cannot submit the tax return, discovered only at year end.
Spreadsheet categories that do not map to HMRC’s categories, so totals are misclassified.
Forgetting to reauthorise the bridge after 18 months.

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Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 8 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.