Bridging Software for MTD

How to use bridging software for Making Tax Digital VAT returns

Making Tax Digital (MTD) has reshaped how small businesses handle their VAT returns. But for many, especially those still relying on spreadsheets or older accounting systems, staying compliant can feel like a minefield.

That’s where bridging software comes in.

It’s a practical workaround for businesses that aren’t quite ready to switch to fully digital bookkeeping – or that don’t want to overhaul their existing systems and processes just to meet HMRC’s rules.

This guide explores what bridging software is, how it works and how to use it to stay compliant with MTD. Whether you’re a sole trader juggling spreadsheets or a small business owner trying to navigate VAT submissions, here’s what you need to know.

What is bridging software?

Bridging software is a digital tool that acts as a connector between your existing financial records (typically kept in a spreadsheet) and HMRC’s online systems. It allows you to submit your VAT returns digitally without switching to more expensive or unfamiliar accounting software.

It’s called ‘bridging software’ because it literally bridges the gap between older, non-compatible systems and the new MTD requirements.

It’s important to be clear that bridging software only helps with submitting your VAT returns. It doesn’t replace the need to keep your VAT records digitally – that part is still on you.

If you're unsure whether your current system meets HMRC’s requirements – or how the upcoming MTD for ITSA changes might affect you – it’s a good idea to speak to a qualified tax adviser.

Why does bridging software matter for MTD?

If you’re a VAT-registered business, under MTD you must meet three core requirements:

1. Keep digital records of your VAT transactions.
2. Use software to maintain digital links between records and calculations.
3. Submit your VAT returns via MTD-compatible software.

Manually typing VAT figures into HMRC’s website is no longer allowed. Even copy-and-pasting from one spreadsheet to another is against the rules.

If you’re still tracking VAT in Excel or Google Sheets, bridging software offers a way to stay compliant, as it lets you submit your returns digitally while continuing with your current setup. But there are some important limitations, which we’ll explore later on.

Who might need bridging software?

Bridging software is usually used by:

• Sole traders and micro businesses still using Excel or Google Sheets
• Businesses with legacy accounting software that isn't MTD-compatible
• Companies working with accountants who handle VAT submissions outside a cloud system
• Businesses looking to delay a full migration to new software

If you fall into one of these categories, bridging software might be a sensible short-term solution. But we’d always recommend speaking to a professional tax advisor, who can help you decide the best option for your business.

Larger or more complex businesses, on the other hand, will often benefit from switching to fully-integrated accounting software, as it can automate more of the VAT process and reduce the risk of errors.

How does bridging software work in practice?

Here’s a typical overview of how most bridging software tools work:

1. You maintain your VAT records in a spreadsheet

You record all sales, purchases, and VAT owed and reclaimed in a structured format that the bridging software can read.

2. The software connects to your spreadsheet

Many tools use an upload process or an Excel plugin. Some will provide templates to help you format things correctly.

3. You submit your return directly to HMRC

Once the figures are verified, the bridging software sends the data to HMRC’s system using a secure digital link. You'll usually get a confirmation receipt once it's received.

But remember: just submitting the numbers isn’t enough. HMRC expects you to keep a digital trail from the original transaction right through to the final return. If your spreadsheet relies on manual editing or copy-pasting, you might be falling short of the rules without even realising.

What digital records must be kept?

MTD covers not only how you submit your VAT return but also how you store and manage your records.

Businesses are required to keep the following information in digital format:

• Business name, VAT number and VAT accounting scheme
• Details of sales and purchases, including date, amount and VAT rate
• Adjustments (like corrections or partial exemptions)
• VAT return calculations

And all of this must be digitally linked. That means no typing or copying figures and no manual summaries – just a clean digital flow from the transaction to the final numbers.

What features to look for in bridging software

If you’re exploring bridging software options, here are some of the most important things to check for:

• HMRC-recognised software – Only use tools listed on HMRC’s approved software page.
• Ease of use – If you’re not a spreadsheet expert, choose a tool with clear instructions or helpful support.
• Templates and formatting help – Some providers include templates to help you structure your spreadsheet correctly. Others leave you to figure it out on your own.
• Customer support – Things can go wrong or you may have questions, especially the first time you’re using new software. A support team that speaks your language can be a real lifeline.
• Security features – Your VAT data is sensitive. Make sure the bridging software provider uses secure encryption and has a good track record.

Some software offers extras like audit trails, accountant access or integration with desktop software. These can be useful but aren’t essential for everyone so check what you need to make sure you don’t end up paying for tools you don’t use.

Benefits of bridging software

Bridging software isn’t a long-term solution for everyone. But for some businesses, it’s a useful way to stay compliant while keeping costs and disruption low.

Here are some of the main benefits:

• Lower cost – Many bridging software tools charge a small one-off or annual fee.
• Quick to implement – No big software rollout or training needed.
• Familiar workflow – Keep using your existing spreadsheets (with a few tweaks).
• Peace of mind – Meet the submission requirements without overhauling your existing processes.

Just keep in mind that you still need to ensure your spreadsheets meet HMRC’s digital record-keeping standards.

Bridging software vs full MTD software

How Zempler Bank can help

Zempler Bank’s MTD tool lets you complete and submit your VAT returns directly from your business account for free and without the need for bridging software. MTD compliant software keeps everything organised digitally, so you can kiss goodbye to paperwork.

Who can use our MTD tool?

Our MTD tool is available for free to all Zempler Bank business account customers.

New to Zempler Bank?

Our business bank accounts are built for sole traders and small businesses:

• Real-time notifications so you can stay on top of spending.
• Smart expense tracking to make tax-time easier.
• Instant transaction records that help with VAT record-keeping.
• No hidden fees or complex pricing.

Please note, the content in this article is not guidance from Zempler Bank and was created in whole or in part using GenAI. It may contain errors or inaccuracies and should not be relied upon as a substitute for professional advice. Zempler Bank makes no representations or warranties of any kind, explicit or implied with respect to the contents of this article. Without limitation, Zempler Bank specifically excludes and disclaims all express or implied warranties and conditions to the extent permitted by law, and any action taken using such content is strictly at the user’s risk.