Can You Use Excel for Making Tax Digital? 2026/27 Guide

With Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) now live, many practitioners and their clients are evaluating their existing bookkeeping systems. A critical question arises: Can you use Excel for Making Tax Digital?

The short answer is yes, you can continue using Microsoft Excel or other spreadsheets to maintain your records.  However, you cannot use Excel in isolation to comply with the new regime.

Functional Compatible Software and Bridging

Spreadsheets alone do not have the capability to submit data directly to HMRC.  To achieve compliance, taxpayers must use their Excel spreadsheets in conjunction with “bridging software”.

Bridging software acts as a secure connector. It extracts the summary data from your spreadsheet and transmits it to HMRC via an Application Programming Interface (API).  Together, your Excel spreadsheet and the bridging software are classified by HMRC as “functional compatible software”.

“If you use spreadsheets for your records, you can continue to use them. But you’ll still need software that links to your spreadsheets (sometimes called bridging software). This is how you’ll send quarterly updates and submit your tax return.”

The Mandation Scope: Sole Traders and Landlords (>£50k)

For the 2026/27 tax year, which commenced on 6 April 2026, MTD for ITSA is legally mandatory for sole traders and landlords whose total qualifying income exceeds £50,000.  If a taxpayer breaches this £50,000 threshold, they must keep their records digitally and provide quarterly updates using compatible software.

The Strict “Digital Link” Rule

While Excel is permitted, HMRC strictly regulates how data moves between the spreadsheet and the bridging software. HMRC requires unbroken “digital links” throughout the software chain.

Manual copying is strictly prohibited. You cannot use “cut and paste” to move data from the spreadsheet into the submission portal, nor can you manually re-type the figures.  A digital link must exist so that the data flows seamlessly.  Acceptable digital links include linking cells via formulas or exporting the Excel data as a CSV file which is then digitally imported into the bridging software.

Mandatory Data Points in Excel

To qualify as a valid digital record, your Excel spreadsheet must capture specific transaction details.

“A digital record is a record of your income or expense that’s created and stored using software compatible with Making Tax Digital for Income Tax.”

For every transaction, the digital record in your spreadsheet must include:

• The amount of the transaction.
• The date the income was received or the expense occurred.
• The category of the income or expense.

Furthermore, you must maintain separate digital records for each trade.  If a client operates both a self-employment business and a property business, they must keep the digital records for these two income sources distinct within their software architecture.

Immediate 2026/27 Deadlines

The MTD for ITSA start date was 6 April 2026.  Under the new regime, functionally compatible software must add together the digital records every three months to create category totals, which are then sent to HMRC as a quarterly update.

For the very first quarter (covering the period from 6 April 2026 to 5 July 2026), the mandatory submission deadline is 7 August 2026.  As this deadline falls today, any sole trader or landlord mandated for this phase must immediately ensure their Excel and bridging software setup is authorised and that their first update is submitted.

Summary Table: Excel and MTD for ITSA 2026/27

For completeness, practitioners should urgently audit any clients currently using Excel to manage businesses exceeding the £50,000 threshold, ensuring that approved bridging software is licensed, API connections are authorised via the Government Gateway, and that no manual data entry breaks the digital link before today’s submission deadline.