For years, spreadsheets have been the go-to tool for tracking income and expenses. But under Making Tax Digital (MTD), they just won’t cut it. Here’s why.
Spreadsheets aren’t fully digital
MTD requires digital records and a direct link to HMRC. Copying and pasting figures into a form won’t be allowed – it breaks the “digital link” rule. However, you can look into ‘bridging software’ that will convert your spreadsheet to MTD compliant format.
Risk of errors
Spreadsheets are prone to mistakes. One wrong formula or accidental overwrite can cause huge problems, especially when quarterly reporting is mandatory.
No automation
Software like Xero pulls in bank transactions, invoices, and receipts automatically. Spreadsheets can’t match that — meaning more admin and higher risk of missing transactions.
Penalties for non-compliance
If HMRC finds you’re not keeping records in an approved way, you risk penalties and extra scrutiny.
The better alternative: Cloud accounting software
Xero and other MTD-compliant tools are designed to:
- Maintain digital records in line with HMRC rules
- Submit quarterly updates automatically
- Provide real-time visibility of your tax position
In Summary
Spreadsheets might feel familiar, but they’ll soon be a compliance risk. By switching now, you’ll not only be MTD-ready, you’ll also benefit from smarter bookkeeping, better reporting, and less admin.
Talk to us today about moving onto Xero ahead of MTD.