What Is MTD-Compatible Software?
30-second answer
MTD-compatible software is software that works with HMRC's Making Tax Digital system.
For Making Tax Digital for Income Tax, HMRC says software needs to support digital records, digital links, quarterly updates and final declaration submission.
Some people use an accountant, some use full accounting software, and some use software that connects existing records, such as spreadsheets, to HMRC.
What's important is that the software you choose must support the MTD process.
This guide is most relevant if you are:
- A sole trader or landlord
- Choosing software for Making Tax Digital
- Comparing accounting software and bridging software
- Trying to understand what HMRC means by compatible software
- Looking for a simpler way to meet MTD requirements
This guide covers
This guide is provided for general information only and is based on HMRC guidance available at the time of writing.
HMRC says that people using Making Tax Digital for Income Tax need to find software that works with HMRC MTD systems in order to comply.
Software, or a combination of software such as spreadsheets plus bridging software, must have the ability to create, store, correct and link digital records, send quarterly updates and submit final declarations.
HMRC provides a software finder tool to help sole traders and landlords find software options for Making Tax Digital for Income Tax.
suiteSheets is proudly HMRC-recognised MTD bridging software.
In short
Compatible software needs to support the key MTD tasks: digital records, digital links, quarterly updates and final declaration submission.
MTD-compatible software is software that can work with HMRC's Making Tax Digital system.
Essentially, it is software that helps you keep records digitally and send the required information to HMRC in the correct way.
It can be a full accounting package, spreadsheets and bridging software, a specialist tool, or more than one type of software working together.
In short
MTD-compatible software is software that can support the Making Tax Digital process required by HMRC.
HMRC explains that software used for MTD for Income Tax needs to support the main MTD process.
Create and store digital records
Records of self-employment and property income and expenses need to be created and stored digitally.
Submit quarterly updates
Quarterly updates are summaries of income and expenses sent to HMRC through compatible software.
Submit final declarations
Final declaration is the new term for your Self Assessment tax return. This must also be submitted through compatible software.
Work with other software
If you use more than one type of software, such as spreadsheets and bridging software, they must connect to each other to meet MTD digital link and submission requirements.
In short
MTD software helps move your records through the MTD process and on to HMRC.
There is no single type of MTD software that suits everyone.
Full accounting software
A full bookkeeping platform that may include bank feeds, invoicing, reporting and MTD submissions.
Bridging software
Software that connects existing digital records, such as spreadsheets, to HMRC's MTD system.
Specialist MTD tools
Software designed around a specific MTD structure, such as landlord records, sole trader records or simpler submissions.
Accountant-managed software
Some people work with an accountant who uses software on their behalf.
People can use a single software product that handles everything, such as full accounting software, or a combination of compatible software, such as spreadsheets and bridging software.
The important thing is that your income and expenses are stored digitally, the figures move through a digital process, and the required information can be submitted to HMRC using compatible software.
Some people choose full accounting software because they want features such as bank feeds, invoicing, reconciliation and wider reporting.
Other people prefer a spreadsheet-based approach because their records are straightforward and they already understand spreadsheets.
In short
You can use one software product, or more than one, so long as the digital process meets the MTD requirements.
This is one of the main reasons bridging software exists.
HMRC does not require taxpayers to abandon spreadsheets. However, your spreadsheet records need to work within a digital process that supports Making Tax Digital requirements.
Depending on the software you use, this may involve uploading information from an existing spreadsheet, linking data into a template or using a spreadsheet designed specifically for MTD submissions.
See our guides on using Excel for MTD and using Google Sheets for MTD for more detail.
In short
You can keep using spreadsheets, but they need to work with software that can send information to HMRC.
suiteSheets is MTD-compatible software designed for sole traders and landlords who prefer a spreadsheet-based approach to Making Tax Digital.
It works by helping you structure your spreadsheet records and prepare the figures needed for MTD submission.
You can use a full suiteSheets template or add the Overview sheet to an existing spreadsheet.
Full suiteSheets template
Ideal if you want a clean, fresh start to your record keeping.
- Income and expense sheets
- Overview sheet built in
- Works in Excel and Google Sheets
- HMRC recognised categories
Overview sheet only
Ideal if you already have a spreadsheet set up and want to keep it.
- Add the Overview sheet to your current spreadsheet
- Link your existing totals
- Works in Excel and Google Sheets
- HMRC recognised categories
MTD-compatible software means software that works with HMRC's Making Tax Digital system and supports the MTD process.
Not always. Full accounting software is one option, but compatible software can also include bridging software and specialist MTD tools.
Sole traders and landlords can use spreadsheets as part of their digital record keeping process provided the records meet MTD requirements and submissions are made using compatible software.
People can use a single software product that handles everything, such as full accounting software, or a combination of compatible software, such as spreadsheets and bridging software.
HMRC does not currently provide MTD software. People need to choose software that works for them and with Making Tax Digital for Income Tax requirements.
Yes. suiteSheets is HMRC recognised bridging software.
suiteSheets is designed as MTD-compatible software for sole traders and landlords who prefer using spreadsheets.
You can work with a full suiteSheets template or simply add the Overview sheet to your existing spreadsheet.
This guide is provided for general information only and is based on HMRC guidance available at the time of writing.
suiteSheets is software for spreadsheet users. We do not provide tax advice, accounting advice or legal advice. If you are unsure how Making Tax Digital applies to your circumstances, contact HMRC or a qualified adviser.
These HMRC pages provide further context on Making Tax Digital for Income Tax, eligibility, digital records, compatible software and signing up.
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suiteSheets is MTD-compatible software designed for sole traders and landlords who prefer a spreadsheet-based approach to Making Tax Digital.
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