Digital Record-Keeping for MTD: What Counts & What Bridging Software Does

"Keep digital records" is one of the core MTD rules — and one of the most misunderstood. It doesn't mean you have to abandon spreadsheets or scan every receipt. Here's what it actually requires, and where bridging software fits.

What "digital records" really means

Under MTD for Income Tax, you must capture your income and expenses electronically. For each transaction that generally means recording:

• the date,
• the amount, and
• the category (what kind of income or expense it is).

Those records can live in accounting software or in a spreadsheet — both are acceptable. What's not acceptable is a purely paper system, or figures that only exist in your head until you tot them up once a year.

You don't have to scan every receipt to satisfy the digital-records rule. You do need the transaction data in digital form. (Keeping the receipts themselves is still sensible and required for the normal retention period.)

The digital link rule

This is the part people miss. It's not enough for your records to be digital — the journey from your records to HMRC must be digital too, with no manual re-keying. HMRC calls the connections between each step digital links.

A digital link is an electronic transfer with no human retyping, such as:

• a formula linking cells or sheets,
• importing/exporting a file between programs, or
• an API call from software to HMRC.

What is not a digital link:

• Retyping figures from one place to another, or
• Copying and pasting between cells or documents.

The idea is that once a number is captured, it should flow all the way to HMRC without a human transcribing it — which is where errors creep in.

Where bridging software comes in

Plenty of sole traders and accountants have spreadsheets they know inside out and don't want to give up. That's exactly what bridging software is for.

Bridging software reads the totals from your spreadsheet (or other digital records) and submits them to HMRC in the format MTD requires — forming the digital link between your everyday record-keeping and HMRC's systems.

So the workflow becomes:

1. You keep recording income and expenses in your spreadsheet, as now.
2. The spreadsheet feeds the required figures into bridging software via a digital link.
3. The bridging software submits your quarterly update or final declaration to HMRC.

You get to keep the tool you're comfortable with, while still meeting the digital-records and digital-link requirements.

Bridging vs full accounting software

Neither is "better" — they suit different people:

	Bridging approach	Full accounting software
You keep	Your existing spreadsheet	Software does the bookkeeping
Best for	People confident with spreadsheets; accountants with established templates	People who want bank feeds, invoicing and automation
Learning curve	Low — familiar spreadsheet	Higher — new system to learn
Control	You see every formula	More automation, less manual control

Many accountants prefer a bridging-style workflow for a book of clients because it's fast, transparent, and doesn't force every client onto a full accounting package.

What to look for in MTD software

Whatever route you choose, the software must be recognised by HMRC for MTD for Income Tax. Beyond that, useful features include:

• Pulling your obligations from HMRC so you know what's due,
• a clear review step before you file,
• stored submission receipts as proof, and
• keeping your data secure — ideally encrypted, and on your own machine if you're handling client data.

How ThisQuarter fits. ThisQuarter offers a familiar, bridging-friendly workflow — import figures from a labelled spreadsheet or enter them directly, review, and file to HMRC — while keeping all data encrypted on your own computer. See how it works.

The bottom line

"Digital records" means capturing your transactions electronically; "digital links" means those figures reach HMRC without retyping. Bridging software joins the two, so you can keep your spreadsheet and still be fully MTD-compliant.