Make Tax Digital - Excel?

[User31890529]

I'm a small sole trader. I'm also a bit of a technophobe, and anything to do with my tax return makes me extremely anxious. I don't do day-to-day bookkeeping at the moment - I do a big blitz at tax return time, going through online bank statements etc, making sure that everything is covered. So I basically rely on the bank, Paypal, etc to do the bookkeeping for me, and then just bring everything together for the tax return, on a cash accounting basis. Due to the type of business I run, it's not quite as straightforward as it sounds.

I now have to think about how to comply with the Make Tax Digital regime, starting from April next year. This obviously feels like a nightmare.

My business bank (Starling) is starting a scheme which links your account to HMRC under the new regime. So that's one option. But I'm not sure how it would work with bringing in some income that doesn't go through the bank account. I'd feel most comfortable with something I can basically input manually, before sending it off to HMRC every quarter.

I gather that it's possible to do your bookkeeping on Excel, and then use some kind of bridging software to link Excel to HMRC. Does anyone know whether this is the kind of thing that might work for me? And if so, can anyone recommend some cheap bridging software?

Any other suggestions would also be welcome. How are those of you who are already required to do Make Tax Digital getting on with the new regime?

I am using my usual Excel sheet and My Tax Digital as bridging software which is completely free. I've done one quarter so far and it was much less painful than I'd feared.

I have always completed my tax return online for rental income but simply added up the year’s rent and the allowable expenses on paper then added them to my return. I have to start doing MTD from 2027 and am looking for recommendations for appropriate software preferably free. A complicating factor is that me and my partner own different percentages of the properties so the software needs to handle that too. I’m dreading it as I struggle with technology.

Not quite the same but when HMRC introduced this for VAT some years ago, PWC introduced a compliant Excel document that you just linked to your own workings - you granted access to the HMRC site through it. Was a very simple solution and cost about £300 for three years. Hopefully something similar will be available.

I’m using clear books which is free

Sage are doing a free level for self-employed individuals whereby you can link your bank account to the system, tell it which payments are to be counted as income and manually enter any others that you need to (I am similarly paid in an ad hoc way via different routes, so I feel your pain!).

Having dreaded MTD and been sure it was going to be a lot of work, I'm actually now feeling quite optimistic that it will avoid the 'impending sense of doom' tax deadline and allow me to be much more on top of things throughout the year. 🤞🏻🤞🏻🤞🏻

Does anyone use Excel for bookkeeping? Is it easy to do? I mean, is it essentially like a manual system? When I was younger I ran a different business and had a straightforward manual system for that. I seem to have become less adept at that kind of thing though. And in those days I used an accountant to go over everything annually, and they produced the tax return. My current business doesn't justify that level of expense.

I am using FreeAgent. It works with my Mettle business bank account. It’s not been too bad. I have done two returns so far. I used AI chat to help guide me through various steps.
I think the free one that works with your bank account is worth looking into to. I don’t think it will be as bad as you think.