Choosing software for Making Tax Digital, and whether you can keep your spreadsheets
You can use one all-in-one product or keep your spreadsheets with bridging software. What to look for, and the questions that save a painful switch later.
MTD needs two things: digital records of your income and expenses, and software that can send updates and your tax return to HMRC. HMRC publishes a list of compatible products. You can use one product for everything, or more than one.
Keeping your spreadsheets
If your records live in a spreadsheet that works, you can keep it. Bridging software reads the totals from the spreadsheet and sends them to HMRC. It suits a simple business with a few transactions a month. For anything busier, the manual work of typing in bank lines soon outweighs the comfort of the familiar.
Two ways to comply
- Low cost and familiar
- Every transaction typed in
- Fine for a handful of entries a month
- Easy to break a formula unnoticed
- Bank feeds bring transactions in
- Receipts read and matched
- Live figures and tax estimates
- Ready for VAT, payroll and growth
What to look for
- A bank feed from your bank, and receipt capture from your phone.
- Support for every income source you have: self-employment, UK property, overseas property.
- Your accountant’s access, so questions are answered in the software, not by email.
- A fair price as you grow, including VAT and payroll if you will need them.
Whatever you choose, move before a tax year begins, not in the middle of one. Starting clean on 6 April means one set of records for the year.
This insight is general information, not advice for your circumstances. Talk to us before acting on it.