Making Tax Digital (MTD) is changing how landlords and business owners in the UK report their income to HMRC. It replaces old paper methods with a more efficient digital tax system. MTD aims to make tax management more accurate and reduce mistakes. This change helps businesses and landlords meet tax requirements more easily and improve their processes. Taxpayers must keep digital records and submit updates electronically using HMRC-approved software.
For those who have been using spreadsheets for bookkeeping, MTD bridging software provides an easy way to stay compliant without giving up familiar tools like Excel or Google Sheets.
The MTD Timeline: From VAT to Income Tax Self-Assessment
Making Tax Digital (MTD) has been implemented in stages, focusing on different tax obligations. At first MTD for VAT was introduced in 2019 after lots of postponement and preparation. It became mandatory for businesses that are VAT-registered and have sales over £85,000.
Now, all VAT-registered businesses must report income under MTD. This was the first big step towards digital tax reporting. It requires businesses to keep digital records and submit VAT returns through software that works with HMRC, instead of filing manually online.
Starting in April 2025, self-employed individuals and landlords can choose to use MTD-compatible software for Income Tax Self-Assessment before it becomes mandatory. Full enforcement starts in April 2026 for those with business or property income over £50,000 a year. This threshold will lower to £30,000 in April 2027.
This phased approach gives taxpayers time to adapt, bringing hundreds of thousands more individuals into the digital reporting framework gradually. Unlike traditional annual Self-Assessment tax returns, ITSA requires quarterly updates throughout the tax year followed by a final declaration, fundamentally restructuring how self-employed professionals and property landlords manage their tax compliance.
What is MTD Bridging Software and How Does It Work?
MTD bridging software is a secure tool that connects your spreadsheets to HMRC’s online systems using the government’s API platform. It helps landlords, sole traders, and small businesses using Excel or Google Sheets for recording their business transactions to comply with Making Tax Digital requirements.
Instead of typing in figures manually (which is prohibited under MTD anyway), this software links your spreadsheet data, such as income and expenses, directly to the fields HMRC requires. Keeping a constant digital record helps maintain accuracy and meet the record-keeping rules under MTD.
How to Prepare Your Spreadsheet for Digital Tax Compliance with HMRC Bridging Software?
Before connecting your spreadsheet to HMRC via bridging software, your digital record-keeping practices must meet Making Tax Digital standards. Follow these essential steps to ensure your setup is accurate and compliant:
Maintain Digital Links
Replace any manual copy-paste process with digital connections such as formulas, CSV imports, or API integrations. Every data transfer from income entries to expense totals should occur electronically to maintain an unbroken digital chain. Your spreadsheet should act as a single, verifiable source of truth, where each figure can be traced back through linked cells and formulas that meet HMRC’s audit and digital-links requirements.
Categorise Records Clearly
Define Reporting Periods
MTD for ITSA requires quarterly digital updates, so your spreadsheet should clearly separate transactions by tax quarter. Create defined reporting periods that make it easy to generate cumulative figures for each submission. This structure ensures your updates match HMRC’s quarterly reporting schedule and makes ongoing compliance straightforward once your bridging software is configured.
Test Data Accuracy
Before your first submission, thoroughly review your spreadsheet to verify that totals, formulas, and cell references are correct. Check that your figures reconcile with invoices, receipts, and bank statements, and confirm that they map cleanly to HMRC’s boxes in your bridging tool. Testing your data at this stage prevents rejected submissions and establishes a robust framework for seamless, compliant reporting in the future.
How to Connect to HMRC Using Excel Bridging Software for MTD?
Selecting an HMRC-Recognised MTD Bridging Software Provider
Your first step toward MTD compliance is selecting an HMRC-recognised bridging software that supports spreadsheet users. Many MTD-compatible tools are designed as full accounting platforms, but bridging software allows you to retain your existing Excel or Google Sheets system.
When choosing software, first look for tools that integrate well with spreadsheets, support secure Government Gateway connections, and handle data in line with GDPR. For example, Rentalbux allows users to connect their spreadsheets through a secure API without changing how they organise their files. This setup meets HMRC’s digital links requirement and ensures data is encrypted during transfer and when stored.
Also, check if the software provides clear views for mapping spreadsheets and flexible access options, both online and on desktop. It’s important to confirm whether the tool can submit both VAT and ITSA, as having both features in one platform makes compliance easier.
Authorising Your HMRC Account for Digital Submission
Once you’ve chosen your bridging software, the next step is linking it to your HMRC account through the Government Gateway. You’ll sign in using your usual credentials and grant authorisation for the software to submit returns securely on your behalf through HMRC’s API.
For accountants or agents, Rentalbux also supports a multi-client dashboard where authorisations can be managed centrally for different clients or entities.
Linking Your Spreadsheet and Mapping Financial Data
After uploading, use the ledger mapping feature as shown in the figure to match your income and expense categories with HMRC’s ITSA reporting fields. This ensures consistency for your quarterly updates. Your mapping setup is saved for future use, so you only need to update your figures before each submission, making the process efficient and compliant.
Submitting Your ITSA Update Securely
After completing your ledger mapping, you can preview your ITSA update before submission. The software validates all entries against HMRC’s requirements and presents a summary of income, expenses, and reporting periods for review.
How Does MTD Bridging Software Work for ITSA Quarterly Updates?
Tracking Income and Expenses Across Properties or Business Activities
For landlords, the software can track rental income and expenses across multiple properties within a single spreadsheet, aggregating figures appropriately for ITSA submissions. Self-employed professionals can categorise business income, operating expenses, and capital allowances in familiar Excel templates. The MTD bridging tool ensures that all figures are accurately prepared in the format HMRC expects, including cumulative year-to-date totals for quarterly reporting.
Generating and Transmitting Quarterly Updates to HMRC
Submitting Your Final Declaration
At the end of the tax year, ITSA requires a Final Declaration to reconcile all quarterly updates and calculate the final tax liability. MTD-compatible bridging software guides users through this step, ensuring that all income and expenses reported across the year are accurately reflected. For spreadsheet users, the software preserves familiar workflows while maintaining full compliance with HMRC rules.
Tip: Verify ITSA Readiness Many MTD bridging software providers are expanding their platforms from VAT to ITSA. When choosing a tool, confirm that it includes a roadmap for supporting Income Tax requirements, so your system is ready when your income threshold triggers MTD obligations.
What Are the Digital Record-Keeping Requirements for MTD Bridging Software?
Under Making Tax Digital, keeping records digitally is more than just using software—it governs how you capture, store, and preserve all financial data. Every transaction must be recorded digitally, whether through formulas, CSV imports, or API connections. Manual entry is allowed only if entered directly into your digital system; copying figures from paper or other files breaks the required digital chain.
All records must be preserved for at least six years. For spreadsheet users, this means maintaining consistent file formats, preserving formula links, and implementing reliable backups, such as cloud storage or automated copies. Submission confirmations and audit trails from bridging software also form part of your digital records, providing evidence of compliance.
Maintaining an unbroken digital chain ensures transparency, reduces HMRC audit risk, and allows every figure to be traced from the original transaction to the final submission. While setting up these links may require upfront effort, the long-term benefits include greater compliance confidence and reduced administrative burden.
What Are the Common Issues With MTD Bridging Software and How Do I Fix Them?
Even with well-configured MTD bridging software, occasional technical issues can disrupt ITSA submissions. Understanding these common problems and how to resolve them ensures smoother compliance.
Login Failures
These usually occur when your HMRC authorisation has expired after the standard period, or during high-traffic periods on HMRC’s authentication servers. To resolve this, re-authorise your Government Gateway connection through your HMRC MTD bridging software’s settings. Most platforms, including Rentalbux, offer guided workflows that walk you through credential verification quickly and securely.
Submission Rejections
Rejections often stem from incorrect ledger mapping or formatting issues rather than software faults. HMRC validates submissions against strict rules: some figures must be rounded to whole pounds, while others allow two decimal places. Spreadsheet cells containing text where numbers are expected, or formulas producing excessive decimal precision, can trigger errors. Reviewing HMRC’s returned error messages helps pinpoint the issue so you can adjust either your spreadsheet data or ledger mapping configuration.
Broken Digital Links
One of the most common compliance risks for spreadsheet users is breaking the required digital chain. This can happen if formulas are overwritten manually or if copy-paste operations disrupt automated connections. When a bridging tool reports a broken link, restore the original formula or re-import the CSV connection. Regularly testing your spreadsheet’s formulas, particularly before each quarterly ITSA update, helps prevent these issues from blocking submissions.
Quarterly Update Complications
Incorrect period selection is a frequent cause of missing or rejected updates. ITSA quarters follow HMRC-defined date ranges, which may not match calendar quarters. Always verify that your MTD ITSA bridging software is set to the correct reporting period before submitting. Some platforms automatically detect the current quarter, while others require manual selection; therefore, understanding how your software handles reporting periods is essential.
| Issue | Possible Cause | Solution |
|---|---|---|
| Login failure | Expired HMRC authorisation | Re-authorise through MTD bridging software |
| Submission rejected | Incorrect data mapping | Check ITSA cell links and rounding |
| Broken digital link | Manual edits or copy-paste | Restore the automated formula or import the connection |
| Quarterly update missing | Period not selected | Verify dates match HMRC quarter |
Proactively reviewing mappings, formula integrity, totals, and reporting periods before each submission minimises errors and ensures compliance. Built-in validation features and alerts in most bridging tools further reduce the risk of submission problems, giving you confidence that your ITSA updates will be accepted smoothly.
How Do I Choose the Best MTD Bridging Software for Income Tax?
Selecting the best bridging software that fits your tax needs and workflow requires evaluating several key factors beyond basic MTD compliance. First and foremost, the tool must appear on HMRC’s official list of recognised software for ITSA. While recognition ensures compliance, not all approved platforms offer the same features or user experience, so comparing multiple options is essential.
Security and data protection are critical. Choose providers offering two-factor authentication, encrypted data storage, regular security audits, and clear GDPR compliance documentation. Knowing where your financial data resides and who can access it safeguards both your business and, if applicable, your clients’ information.
Finally, consider pricing and support. Transparent, predictable pricing helps budget for MTD compliance, and responsive support ensures issues can be resolved quickly before filing deadlines. Evaluating software across these dimensions ensures that you select a tool not only meeting HMRC standards but also fitting your workflow and providing long-term reliability.
Frequently Asked Questions About MTD Bridging Software
Can I use one tool for both VAT and ITSA?
Yes. Some HMRC-recognised bridging software platforms support both VAT and ITSA. However, always check the provider’s documentation and roadmap to confirm ITSA readiness, especially if you currently use the tool primarily for VAT submissions.
Will MTD for ITSA replace the traditional Self-Assessment?
Yes. Under MTD, quarterly digital updates and a Final Declaration replace the traditional annual Self-Assessment filing, as the final declaration will include both mandated income (like property income) and non-mandated income (such as dividend and interest income). This means you report income and expenses progressively throughout the year, rather than waiting until the end of the year.
Is bridging software suitable for landlords?
Absolutely. HMRC-recognised bridging tools can manage multiple property income streams, track expenses, and map them to ITSA categories within a single spreadsheet or ledger, making it easier for landlords to comply.
Can accountants manage multiple clients through one tool?
Many HMRC-recognised bridging software platforms offer agent dashboards, enabling accountants or tax agents to manage permissions, track submissions, and file updates for multiple clients efficiently.
How secure is bridging software for ITSA submissions?
Leading HMRC-recognised platforms implement secure Government Gateway connections, encryption in transit and at rest, two-factor authentication, and full audit trails, ensuring your financial data remains protected while meeting MTD requirements.
How Can I Transition to Digital Tax Management with Confidence Using MTD Bridging Software?
MTD bridging software provides a practical and compliant solution for spreadsheet users, enabling you to meet Making Tax Digital requirements without abandoning your familiar Excel or Google Sheets workflows. By maintaining secure digital links and automating submissions, bridging tools reduce compliance stress, lower penalty risks, and ensure your ITSA updates are accurate and timely.
For businesses and landlords comfortable with spreadsheets, this approach is a cost-effective alternative to full cloud accounting platforms. You retain control over your data, continue using trusted formulas and templates, and avoid the learning curve of new systems. Establishing solid digital record-keeping practices now positions you for long-term compliance as ITSA and other MTD obligations expand.
The key to success is choosing HMRC-recognised bridging software that suits your workflow, configuring your spreadsheet with clear digital links, and maintaining reliable submission routines that align with HMRC deadlines. Early adoption allows you to refine processes before compliance becomes mandatory, ensuring smooth quarterly updates and a streamlined year-end Final Declaration.
Key Takeaway:
Stay digital, stay connected, and stay compliant. Bridging software transforms MTD from a regulatory requirement into a manageable, integrated part of your existing bookkeeping practices.