What Is Bridging Software?
Bridging software is a tool that connects your existing spreadsheets (like Excel) to HMRC’s MTD system. Instead of changing your entire accounting setup, it allows you to upload VAT or Income Tax data in a format HMRC can accept.
- Low cost or free in some cases
- Great for those already comfortable with spreadsheets
- Minimal training needed
- Still requires manual entry and error checks
- Doesn’t automate bank feeds or expense tracking
- You’ll need to ensure formats match HMRC’s requirements
What Are Full MTD-Compliant Tools?
Full MTD software (like Xero or FreeAgent) is an all-in-one digital accounting solution that automates your financial tracking, syncing directly with HMRC.
- Fully HMRC-recognised
- Automates expense tracking, invoicing, and submissions
- Seamless integration with banks and digital receipts
- Great for scaling businesses or landlords with multiple properties
- Higher monthly cost compared to bridging tools
- Slight learning curve if moving from manual records
Feature Comparison: Bridging vs. Full MTD Software
| Feature | Bridging Software | Full MTD Tool |
|---|---|---|
| Connects with HMRC | ✅ Yes | ✅ Yes |
| Requires spreadsheets | ✅ Yes | ❌ No |
| Bank feed integration | ❌ No | ✅ Yes |
| Digital receipt capture | ❌ No | ✅ Yes |
| Auto expense categorisation | ❌ No | ✅ Yes |
| Useful for landlords | ⚠️ Limited | ✅ Yes |
| Long-term scalability | ❌ No | ✅ Yes |
Who Should Use Bridging Software?
Bridging software can work well for:
- Very small businesses with simple financials
- Those nearing retirement who don’t want a full tech overhaul
- Anyone who’s confident with Excel and just needs a compliant way to submit to HMRC
However, remember that MTD isn’t just about compliance, it’s about improving visibility and making your tax life easier.
Why Full Software Might Be a Smarter Long-Term Play
We suggest making the shift to full software sooner rather than – don’t just tick the compliance box. Take the opportunity to upgrade how you manage your business and finances.
Moving to tools like FreeAgent or Xero gives you automation, visibility, and audit-friendly records that save time and stress in the long run.
Nuvo’s Software Recommendations
- Landlords → Go with FreeAgent for property-level visibility and landlord tools
- Sole Traders → Use Xero Simple for low-cost, high-function automation
Final Verdict: Which One Should You Choose?
Choose bridging software if:
- You’re a one-person operation
- You already use Excel for bookkeeping
- You only need basic MTD compliance
Choose full MTD software if:
- You want automation and error reduction
- You’re growing your business or property portfolio
- You want to stay ahead of future tax requirements
If in doubt, speak to your accountant, or reach out to Nuvo for a free consultation.
