Moving from Spreadsheets to HMRC Compliant Software: A UK Guide

For many UK sole traders and landlords, Excel has been the backbone of their business for years. It is familiar, flexible, and seemingly free. However, with the HMRC MTD income tax changes 2026, the era of the standalone spreadsheet is coming to an end.

If you currently use spreadsheets to manage your tax, you don't necessarily have to abandon them entirely, but you must fundamentally change how you use them to meet the "Digital Link" requirement.

Can You Still Use Spreadsheets for MTD?

The short answer is: Yes, but with caveats. HMRC allows the use of "spreadsheets for digital record-keeping," provided they are used in conjunction with bridging software. However, there is a catch. Under MTD rules, there must be a digital link between the spreadsheet where you record your expenses and the software that submits them to HMRC.

Manual "copy and paste" is strictly forbidden. If you are manually typing totals from one sheet into a portal, you are not compliant and could face HMRC MTD penalties.

Why UK Sole Traders are Ditching Excel for Kletta

While bridging software is a temporary fix, most UK businesses are finding that moving to an integrated app like Kletta is far more efficient.

1. Automation vs. Manual Entry: Excel requires you to type every transaction. Kletta uses automated bank feeds to pull transactions directly from your UK bank account.
   
2. Receipt Management: Spreadsheets can't store photos of receipts. Kletta allows you to snap a photo and link it directly to the transaction, meeting HMRC's requirement for keeping supporting evidence.
3. Real-Time Tax Calculation: A spreadsheet is static. Kletta provides a live estimate of your tax bill as you spend and earn, helping you manage your cash flow in real-time.
   

The Migration Process: A Step-by-Step Guide

1. Audit Your Current Sheet: Ensure your 2025/26 records are clean. Identify your common expense categories (e.g., travel, office costs, stock).
2. Export Your Data: Most MTD software allows you to import CSV files. Export your current Excel data to ensure a smooth transition of historical records.
3. Set Up Digital Links: If you insist on using Excel for complex calculations, you must ensure the data flows into your MTD software via a formula or an automated import—never by re-typing.

 Spreadsheet Transition in Tech and Rural Hubs

London and Cambridge: The Tech Switch

In the Silicon Fen (Cambridge) and London’s Tech City, business owners are moving rapidly toward API-driven solutions. Here, manual spreadsheets are seen as a liability. Moving to Kletta aligns your business with the digital standards of the UK’s most innovative regions.

Rural UK: South West and The Highlands

For sole traders in rural areas like Cornwall or the Scottish Highlands, internet connectivity can be a concern. Kletta’s mobile-first design allows for offline record-keeping; you can snap a receipt in a remote area, and the app will sync once you have a 4G or Wi-Fi connection, ensuring you remain MTD-compliant even on the go.