Preparing for MTD ITSA: Digital Record-Keeping and Choosing Software

As the Making Tax Digital for Income Tax Self Assessment (MTD ITSA) deadline approaches, landlords and self-employed individuals across the UK are asking one thing:

“What do I need to do to get ready?”

One of the most important steps is setting up digital record-keeping — a requirement under the MTD ITSA rules starting April 2026 for those earning over £50,000. In this blog, we’ll explain:

• What digital record-keeping actually means
• What software you need (and what you don’t!)
• How to keep compliant with HMRC
• And how Merranti Accounting can make this simple and affordable

What is Digital Record-Keeping?

Under MTD ITSA, you must keep digital records of all income and expenses related to your self-employment or property business. This means:

• No more paper receipts in shoeboxes
• No handwritten ledgers
• No spreadsheets that don’t connect to HMRC

Instead, your records need to be digitally stored and linked to the software that submits your quarterly and year-end tax updates.

What Must Be Recorded?

HMRC expects the following to be tracked digitally:

• Date of transaction
• Income/expense category (e.g. rent, repairs, travel)
• Amount received or paid
• VAT details (if applicable)
• Digital copy of invoices or receipts (e.g. photos or scans)

These records form the foundation of your quarterly updates and your final declaration to HMRC.

What Are Digital Links?

One important MTD term is “digital links.”

A digital link is a connection between pieces of software or systems that transfers data without human intervention.

This means you can’t copy and paste from one spreadsheet to another or retype figures into your submission tool. Instead, the flow of information must be automated between your record-keeping system and your submission software.

Can I Still Use Spreadsheets?

Yes — spreadsheets are allowed under MTD ITSA.

BUT you must use bridging software to connect them to HMRC’s systems. Bridging software reads your spreadsheet data and submits it in the required MTD format.

This is a great option for people comfortable with Excel but not ready to move to full accounting platforms.

At Merranti Accounting, we support both spreadsheet users and those wanting to transition to cloud software.

Choosing the Right Software for MTD ITSA

There are three main options for MTD-compliant software:

🥇 1. Xero Simple Plan (Merranti Recommendation)

What it includes:

• Bank feeds and reconciliation
• 10 invoices/month
• Receipt capture (via Hubdoc)
• Quarterly MTD ITSA submissions (via Xero Tax)
• Accountant access for real-time collaboration

Best for:
Self-employed individuals and landlords who want a low-cost, intuitive system that’s future-proof and easy to use.

At Merranti, we’ve chosen Xero Simple as our go-to solution for digital compliance. Why?

• It’s MTD-ready
• It integrates with our internal systems
• It offers real-time data for cash flow and tax planning
• It’s simple enough for non-accountants, but powerful enough to grow with your business

We even set it up for you and provide training.

🧮 2. Spreadsheets + Bridging Software

Cost: Varies — Merranti has a custom setup

What it includes:

• Your existing Excel sheets
• MTD-compliant bridging tool
• Submission to HMRC

Best for:
People who are already using spreadsheets and want to minimise disruption.

We’ll help structure your spreadsheet to meet MTD rules and connect it to our submission software, all while keeping you compliant.

Which Option is Right for You?

Want help deciding? Our team will assess your business and recommend the simplest and most cost-effective route.

How Merranti Helps You Prepare

At Merranti Accounting, we’ve created an end-to-end support package for MTD ITSA. It’s designed to reduce your workload, increase compliance, and give you peace of mind.

🧾 1. Digital Records Setup

We’ll help you:

• Choose and install software
• Set up bank feeds and categories
• Organise receipts and invoices
• Create a custom structure for your income streams

🧠 2. Training and Support

• One-to-one training
• Pre-recorded tutorials
• Live support via phone, email, or even WhatsApp
• Dedicated account manager

🤖 3. Martin – Your Digital Assistant

Our in-house AI assistant Martin sends:

• Quarterly deadline reminders
• Checklist of what’s due
• Alerts if anything’s missing

Martin integrates with your software and works 24/7 — meaning you don’t have to.

📆 4. Quarterly and Year-End Review

Before anything is sent to HMRC, a Merranti accountant will:

• Review your digital records
• Check for missing expenses
• Optimise your tax position
• Submit updates and declarations on your behalf

No stress. No penalties. Just clarity.

Why Act Now?

• The £50,000 threshold applies from April 2026
• HMRC assesses your 2024/25 income to determine inclusion
• You need your system in place at least a year before to avoid panic or errors
• Some software providers will raise prices closer to deadline

Summary: 5 Steps to Prepare Today

1. Check if your income qualifies (>£50k from self-employment + property)

2. Choose your record-keeping method (Xero, spreadsheet, or other)

3. Start keeping digital records now

4. Connect with Merranti for setup and training

5. Get peace of mind ahead of the deadline

Final Thoughts: MTD ITSA Doesn’t Have to Be a Burden

Digital record-keeping is a mindset shift — but one that can save you time, improve visibility, and even boost profitability if done right.

With Merranti Accounting, you’re not doing it alone.

We’ll help you:

• Stay compliant
• Make tax time stress-free
• Keep control of your business finances

Whether you’re a spreadsheet fan or ready to embrace Xero, we’ve got a simple, affordable path for you.

Find more About MTD ITSA here