MTD Bridging Software for Therapists: HMRC's Own Tool, Tested Against 4 Real Profiles
A practical guide built from HMRC's own selection tool, tested against four real psychotherapist profiles. Keep your spreadsheet — satisfy HMRC.
If you are a psychotherapist, counsellor, or CBT therapist in private practice, you have probably heard about Making Tax Digital (MTD) and may be wondering whether you need to do anything, and if so, what.
The short answers are: yes, MTD for Income Tax is coming and will affect most private practitioners; and no, you do not need to abandon your spreadsheets. Bridging software exists specifically to let you keep working the way you already work while satisfying HMRC's new digital requirements.
This guide focuses exclusively on bridging software (not full accounting platforms) and is built around data from HMRC's own software selection tool, tested against four real psychotherapist profiles.
Before you read on: do you need bridging software?
Bridging software is the right choice if you currently use a spreadsheet (Excel or Google Sheets) to record your income and expenses and want to keep doing so. It connects your spreadsheet to HMRC's systems for digital submission without requiring you to learn a new accounting platform.
If you would prefer a tool that manages your records for you, with bank feeds, invoicing, and automated categorisation, you want a full accounting platform instead, such as FreeAgent, Xero, or QuickBooks. This guide does not cover those tools.
What MTD Actually Requires of UK Therapists in Private Practice
MTD for Income Tax replaces the annual Self Assessment tax return with a system of quarterly digital reporting. Once you are mandated, you will need to:
- ○Keep digital records of your practice income and expenses throughout the year
- ○Send four quarterly updates to HMRC, summarising income and expenses for each quarter
- ○Submit a Final Declaration at the end of the tax year, which replaces your SA100 return
The date you become mandated depends on your gross qualifying income, meaning your total session fees before deducting any expenses:
| Mandatory From | Gross Income Threshold | Who This Affects |
|---|---|---|
| 6 April 2026 | Over £50,000 | High-volume and established practices |
| 6 April 2027 | Over £30,000 | Most full-time psychotherapists in private practice |
| 6 April 2028 | Over £20,000 | Part-time practitioners and those building their practice |
Quarterly updates ≠ Final Declaration
Almost all bridging software can currently handle quarterly updates, meaning the four income and expense summaries you send to HMRC each year. The Final Declaration (your complete year-end tax return) is a separate, more complex step. Many tools list this as 'in development'. This guide clearly marks which tools have the Final Declaration ready now and which do not.
Can UK Therapists Still Use Spreadsheets for MTD?
Yes, and this is exactly what bridging software is designed for.
HMRC requires that your records are kept digitally and submitted digitally. It does not require you to use a specific accounting platform. Bridging software sits between your existing spreadsheet and HMRC's systems, reading the relevant totals and submitting them on your behalf, without requiring any change to how you record your income and expenses day to day.
The one rule to follow is the digital link requirement: once data is recorded in your spreadsheet, it must flow to HMRC without being manually retyped. A formula connecting cells in your spreadsheet counts as a valid digital link. Typing the same number into a web form does not.
| Bridging Software | Full Accounting Platform | |
|---|---|---|
| Keep your spreadsheet | ✓ Yes, unchanged | ✗ Move to platform's system |
| Learning curve | Low | Moderate to high |
| Typical annual cost | £0 to £50 | £120 to £400+ |
| Data stays on your device | Usually yes | No, stored on vendor servers |
| Best for | Simple practices happy with spreadsheets | Higher-volume practices wanting automation |
How This Guide Was Put Together
Rather than reviewing vendor websites, we used HMRC's own software selection tool, the official HMRC page that filters compatible software based on your specific tax profile. We ran four different psychotherapist profiles through the tool and recorded exactly which bridging tools appeared in each case.
| Profile | Description | Without VAT | With VAT |
|---|---|---|---|
| 1: Pure sole trader | Therapy income only. No employment, investments, or other income. | 50 tools | 36 tools |
| 2: With family/personal items | Plus marriage allowance, student loan, child benefit charge, or voluntary Class 2 NI. | 39 tools | 28 tools |
| 3: Employment + investments | Sole trader + PAYE + dividends + savings interest + capital gains + SIPP + Gift Aid. | 37 tools | 27 tools |
| 4: Maximum complexity | Every available item ticked, including CIS, partnership income, foreign income, state pension. | 19 tools | 12 tools |
Do not over-tick
A psychotherapist who ticks every available item 'just to be safe' will see 19 tools. The same psychotherapist who only ticks what genuinely applies will see between 37 and 50 tools. That is up to 31 tools lost for no reason. Only select items that actually appear on your tax return.
Find Your Profile, Find Your Tools
Use the descriptions below to identify which profile most closely matches your situation, then refer to the tool tables for that profile. If you are between profiles, use the one that matches your more complex situation.
Profile 1: Pure Sole Trader — Therapy Income Only
This profile applies if:
- ○Your only income is from your therapy practice
- ○You have no employment alongside your practice
- ○You have no investments generating taxable income (ISA income is tax-free and does not count)
- ○You have no rental income
- ○You have no capital gains, student loan, pension contributions, or Gift Aid donations to declare
- ○You are not VAT registered
This profile produces the broadest list of compatible bridging tools: 50 without VAT, 36 with VAT. The majority of tools in this list have the Final Declaration ready now, meaning they can handle your complete tax picture end to end.
Free Bridging Tools — Profile 1
| Tool | Creates Records? | Final Declaration | Spreadsheet |
|---|---|---|---|
| My Tax Digital (Free) | Yes | Ready now | Excel or Google Sheets |
| TaxNav | Yes | Ready now | Excel or Google Sheets |
| TaxHeaven | Yes | Ready now | Not VAT registered only |
| Self Assessment Direct | Yes | Ready now | Yes |
| AbraTax | No | In development | Excel and Google Sheets |
| Acxite | Yes | In development | Yes |
Paid Bridging Tools — Profile 1
| Tool | Creates Records? | Final Declaration | Spreadsheet | Approx. Cost/yr |
|---|---|---|---|---|
| 123 Sheets | Yes | Ready now | Excel, Google Sheets, Numbers | ~£40 |
| 123 e-Filing | No | Ready now | Excel | Verify at vendor |
| Absolute Excel | No | Ready now | Excel only | ~£40 |
| VitalTax | No | Ready now | Excel Add-in (no upload needed) | ~£30 |
| TaxCalc | No | Ready now | Imports CSV/Excel | ~£24+ |
| Forbes MTD | Yes | Ready now | Excel, Sage, VT Transaction+ | ~£10/month |
| MTD iPhone & iPad | No | Ready now | Yes | Verify at vendor |
| MTD macOS | No | Ready now | Yes | Verify at vendor |
| !Coconut | Yes | Ready now | Bank feeds (not traditional spreadsheet) | Verify at vendor |
| untied | Yes | Ready now | Can import from spreadsheet | Verify at vendor |
Prices are approximate based on publicly available information at March 2026. Always verify current pricing directly with the vendor before purchasing.
Profile 2: Sole Trader with Family or Personal Tax Items
This profile applies if:
- ○You are claiming Marriage Allowance (your partner earns below £12,570)
- ○You are repaying a student loan
- ○Your household income exceeds £60,000 and you claim Child Benefit (triggering the High Income Child Benefit Charge)
- ○Your profits fall below £6,725 and you are voluntarily paying Class 2 NI to protect your State Pension
- ○You are not VAT registered
This profile produces 39 tools without VAT and 28 with VAT. Most tools from Profile 1 remain available. The key difference is that several tools available only to the simplest profiles, namely TaxHeaven, untied, and a few others, disappear from this profile.
Free Bridging Tools — Profile 2
| Tool | Creates Records? | Final Declaration | Spreadsheet |
|---|---|---|---|
| My Tax Digital (Free) | Yes | In development | Yes |
| TaxNav | Yes | In development | Yes |
| Self Assessment Direct | Yes | In development | Yes |
| AbraTax | No | In development | Yes |
| Acxite | Yes | In development | Yes |
Paid Bridging Tools — Profile 2
| Tool | Creates Records? | Final Declaration | Spreadsheet | Approx. Cost/yr |
|---|---|---|---|---|
| 123 Sheets | Yes | In development | Excel and Google Sheets | ~£40 |
| 123 e-Filing | No | In development | Yes | Verify at vendor |
| Absolute Excel | No | In development | Excel only | ~£40 |
| VitalTax | No | In development | Excel Add-in | ~£30 |
| TaxCalc | No | In development | Imports CSV/Excel | ~£24+ |
| Forbes MTD | Yes | In development | Yes | ~£10/month |
| MTD iPhone & iPad | No | In development | Yes | Verify at vendor |
| MTD macOS | No | In development | Yes | Verify at vendor |
| !Coconut | Yes | In development | Bank feeds | Verify at vendor |
Prices are approximate based on publicly available information at March 2026. Always verify current pricing directly with the vendor before purchasing.
Note on the Final Declaration for this profile
Most bridging tools in this profile show 'In development' for the tax return. This means you can handle your quarterly updates digitally right now, but the year-end Final Declaration will likely require an accountant or an alternative route until these tools complete their development. Plan for this in your first year.
Profile 3: Therapist with Employment Alongside Private Practice
This profile applies if:
- ○You run a therapy practice as a sole trader AND have PAYE employment income alongside it (NHS, school, hospital, or any employed role)
- ○You are single with no children (or if those items do not apply to you)
- ○You may have investments outside an ISA generating dividends or capital gains
- ○You may earn savings interest above your personal savings allowance (£500 for higher-rate taxpayers; £1,000 for basic-rate)
- ○You may contribute to a Self-Invested Personal Pension (SIPP) or other personal pension
- ○You may make charitable donations under Gift Aid
This profile produces 37 tools without VAT and 27 with VAT. The combination of employment income with sole trader income means that several simpler-profile tools, most notably Absolute Excel, drop out. All tools in this profile show the Final Declaration as in development, meaning quarterly updates are covered but the year-end return will need a separate solution for now.
Note: income held inside an ISA is tax-free and does not affect your profile. Tick UK dividends, capital gains, or interest only if these apply to you.
Free Bridging Tools — Profile 3
| Tool | Creates Records? | Final Declaration | Spreadsheet | VAT Compatible? |
|---|---|---|---|---|
| My Tax Digital (Free) | Yes | In development | Yes | Yes |
| TaxNav | Yes | In development | Yes | Yes |
| Self Assessment Direct | Yes | In development | Yes | Yes |
| AbraTax | No | In development | Yes | Yes |
| Acxite | Yes | In development | Yes | Yes |
Paid Bridging Tools — Profile 3
| Tool | Creates Records? | Final Declaration | Spreadsheet | VAT? | Cost/yr |
|---|---|---|---|---|---|
| !Coconut | Yes | In development | Bank feeds | Yes | Verify |
| 123 Sheets | Yes | In development | Excel and Google Sheets | Yes | ~£40 |
| 123 e-Filing | No | In development | Yes | Yes | Verify |
| VitalTax | No | In development | Excel Add-in | Yes | ~£30 |
| TaxCalc | No | In development | Imports CSV/Excel | Yes | ~£24+ |
| Forbes MTD | Yes | In development | Yes | Yes | ~£10/month |
| MTD iPhone & iPad | No | In development | Yes | Yes | Verify |
| MTD macOS | No | In development | Yes | Yes | Verify |
Prices are approximate based on publicly available information at March 2026. Always verify current pricing directly with the vendor before purchasing.
Absolute Excel is not available for this profile
Absolute Excel Income Tax Filer, widely recommended in existing MTD guides for therapists, does not appear in HMRC's filtered results once PAYE employment income is selected alongside sole trader income. If you work in a salaried role as well as running a practice, Absolute Excel is not a compatible choice for your complete tax picture.
Profile 4: Maximum Complexity
This profile applies if:
- ○Construction Industry Scheme (CIS) income
- ○State Pension or private pension income (receiving pension payments, not just contributing)
- ○Income from a partnership
- ○Foreign dividends or foreign interest
- ○Student loan repayments alongside all other Profile 3 items
- ○Marriage Allowance, child benefit charge, or voluntary Class 2 NI on top of employment and investments
This is the most complex profile and produces the shortest list: 19 tools without VAT, 12 with VAT. Most therapists will not fall into this category. If this is your situation, the following bridging tools are confirmed compatible across all complexity levels:
| Tool | Cost | Creates Records? | Final Declaration | VAT Compatible? |
|---|---|---|---|---|
| My Tax Digital (Free) | Free | Yes | In development | Yes |
| TaxNav | Free | Yes | In development | Yes |
| Acxite | Free | Yes | In development | Yes |
| !Coconut Free | Free | Yes | In development | Yes |
| MTD iPhone & iPad | Paid | No | In development | Yes |
| MTD macOS | Paid | No | In development | Yes |
| !Coconut | Paid | Yes | In development | Yes |
For this profile, consult an accountant
If your tax affairs are this complex, using bridging software for quarterly updates while working with an accountant for the Final Declaration is likely the most practical approach.
How to Choose Between the Tools on Your Shortlist
Once you have identified your profile and the tools available to you, four questions will narrow your shortlist to a final choice.
Question 1
Free or paid?
Several capable free tools are confirmed across all profiles: My Tax Digital, TaxNav, Self Assessment Direct, AbraTax, and Acxite. These are a sensible starting point. If you later find them limiting, upgrading to a paid tool is simple.
Paid tools in this space typically cost £24 to £50 per year, which is less than a single therapy session. TaxCalc is the cheapest paid option with a guided workflow designed for non-accountants.
Question 2
Which spreadsheet do you use?
| Your Spreadsheet | Tools That Work Natively |
|---|---|
| Microsoft Excel | VitalTax (Add-in: submit without leaving Excel)Absolute Excel123 SheetsTaxCalc (imports Excel) |
| Google Sheets | 123 SheetsMy Tax DigitalTaxNavAbraTax |
| Either / flexible | 123 SheetsMy Tax DigitalAbraTax |
VitalTax is the only tool that lives inside Excel as an Add-in, meaning you submit directly from within your spreadsheet without visiting a separate website. For Excel users who want minimum friction, this is worth considering.
Question 3
Do you work with an accountant?
If an accountant handles your year-end filing, the handoff between your quarterly tool and their system matters. The most accountant-friendly bridging options are:
- ○Forbes MTD: widely used in accountancy practices; designed for agent-side workflows
- ○TaxCalc: common in accountancy practices; produces exportable reports; your accountant may already use it
If your accountant prefers full cloud access to your records, they may recommend Xero or QuickBooks instead, in which case bridging software is not the right route for you.
Question 4
Is the Final Declaration ready now or in development?
If you want one tool to handle both your quarterly updates and your year-end Final Declaration, you need a tool with tax return status listed as ready now:
| Tool | Cost | Profiles | Final Declaration |
|---|---|---|---|
| My Tax Digital | Free | Profiles 1–3 | Ready now |
| TaxNav | Free | Profiles 1–2 | Ready now |
| Self Assessment Direct | Free | Profile 1 only | Ready now |
| TaxHeaven | Free | Profile 1 only (no VAT) | Ready now |
| 123 Sheets | Paid | Profiles 1–3 | Ready now |
| Absolute Excel | Paid | Profile 1 only | Ready now |
| VitalTax | Paid | Profile 1 only | Ready now |
| TaxCalc | Paid | Profile 1 only | Ready now |
| Forbes MTD | Paid | Profile 1 only | Ready now |
| MTD iPhone & iPad | Paid | Profiles 1–3 | Ready now |
| MTD macOS | Paid | Profiles 1–3 | Ready now |
Tax return readiness data is taken from HMRC's live database at March 2026. This changes as vendors complete development. Always verify current status when running the HMRC selection tool.
Run HMRC's Tool with Your Own Profile
The profiles in this guide cover the most common therapist scenarios, but your specific combination of income sources may differ. The most accurate shortlist you can get is the one HMRC produces when you enter your own details.
Official Resource
HMRC's official software selection tool
Go to: tax.service.gov.uk/find-making-tax-digital-income-tax-software
The tool asks about your income sources and personal tax items. Work through it selecting only what genuinely applies to your situation.
Run it twice, once without VAT and once with VAT, to see exactly which tools the VAT requirement removes from your shortlist.
Filter the results to show bridging software only to cut through the full platform options.
Guidance
Tips for Accurate Results
- ○Only tick income sources that actually appear on your tax return. Do not tick items 'just in case'
- ○ISA income is tax-free and does not appear on your return. Do not tick dividend or interest boxes for income inside an ISA
- ○Tick UK dividends and/or capital gains only if you hold investments in a general investment account outside an ISA
- ○Tick UK interest only if your savings interest exceeds your personal savings allowance: £1,000 for basic-rate taxpayers, £500 for higher-rate
- ○Tick Marriage Allowance only if your partner earns below £12,570
- ○Tick High Income Child Benefit Charge only if either partner earns above £60,000 and you claim Child Benefit
- ○Do not tick Voluntary Class 2 NI unless your profits are below £6,725 and you are choosing to pay it to protect your State Pension
- ○Do not tick Private pension incomes unless you are receiving pension payments; contributing to a pension is a separate item
If You Are VAT Registered
VAT registration (required once your turnover exceeds £90,000) has a significant impact on your software options. Across all four profiles, adding VAT removed between 7 and 14 tools from the available list.
| Profile | Without VAT | With VAT | Tools Lost |
|---|---|---|---|
| 1: Pure sole trader | 50 | 36 | 14 |
| 2: Family/personal items | 39 | 28 | 11 |
| 3: Employment + investments | 37 | 27 | 10 |
| 4: Maximum complexity | 19 | 12 | 7 |
The bridging tools that survive across all profiles including VAT registration are:
- ○Free: My Tax Digital, TaxNav, Acxite, !Coconut Free
- ○Paid: !Coconut, MTD iPhone & iPad, MTD macOS, 123 Sheets, 123 e-Filing, VitalTax, TaxCalc, Forbes MTD
VAT-registered therapists and the Final Declaration
For profiles 2, 3, and 4 with VAT, no bridging tool currently has the Final Declaration fully ready for your complete profile. You will be able to submit quarterly updates digitally, but the year-end Final Declaration will require an accountant or a separate solution until vendors complete development.
Client Confidentiality and Your Tax Records
A common concern for psychotherapists is whether digital tax reporting creates any risk to client confidentiality. It does not, provided you follow a few simple best practices.
HMRC does not require client names or any identifying information in your digital tax records. What is submitted through bridging software is financial totals only: total income for the quarter, total expenses by category. No client names, session details, or clinical information are transmitted to HMRC or retained by the software vendor.
Confidentiality Guidance
Best practice for psychotherapists
- ○Use a client ID code rather than a name in any spreadsheet recording individual transactions; for example, 'P-147' rather than a client name
- ○Keep the key linking IDs to real names within your clinical records system only, never in your financial spreadsheet
- ○For pure bridging tools (VitalTax, AbraTax, Absolute Excel, MTD for iPhone/iPad, MTD for macOS), your detailed records stay on your own device. Only summary totals are transmitted, which provides the strongest structural protection for client privacy
- ○For tools that also create records on their servers, choose vendors with explicit UK GDPR compliance statements
Quick Reference: Bridging Tools at a Glance
Use this table as a starting reference. Cross-check against HMRC's selection tool for your specific profile before purchasing.
| Tool | Cost | P1 | P2 | P3 | P4 | VAT | Final Dec. |
|---|---|---|---|---|---|---|---|
| My Tax Digital | Free | ✓ | ✓ | ✓ | ✓ | ✓ | Ready now |
| TaxNav | Free | ✓ | ✓ | ✓ | ✓ | ✓ | In dev |
| Acxite | Free | ✓ | ✓ | ✓ | ✓ | ✓ | In dev |
| AbraTax | Free | ✓ | ✓ | ✓ | ✗ | ✓ | In dev |
| Self Ass. Direct | Free | ✓ | ✓ | ✓ | ✗ | ✓ | Ready now |
| TaxHeaven | Free | ✓ | ✗ | ✗ | ✗ | ✗ | Ready now |
| !Coconut Free | Free | ✓ | ✓ | ✓ | ✓ | ✓ | In dev |
| 123 Sheets | Paid | ✓ | ✓ | ✓ | ✗ | ✓ | Ready now |
| VitalTax | Paid | ✓ | ✓ | ✓ | ✗ | ✓ | Ready now |
| TaxCalc | Paid | ✓ | ✓ | ✓ | ✗ | ✓ | Ready now |
| Absolute Excel | Paid | ✓ | ✓ | ✗ | ✗ | ✓ | Ready now |
| Forbes MTD | Paid | ✓ | ✓ | ✓ | ✗ | ✓ | Ready now |
| MTD iPhone/iPad | Paid | ✓ | ✓ | ✓ | ✓ | ✓ | Ready now |
| MTD macOS | Paid | ✓ | ✓ | ✓ | ✓ | ✓ | Ready now |
| 123 e-Filing | Paid | ✓ | ✓ | ✓ | ✗ | ✓ | Ready now |
| untied | Paid | ✓ | ✗ | ✗ | ✗ | ✗ | Ready now |
✓ = confirmed by HMRC's selection tool for this profile. ✗ = did not appear in HMRC's results. Profile columns assume no VAT; VAT registration removes approximately 10 additional tools. Data from March 2026 — always verify at HMRC's tool before purchasing. This guide does not constitute tax, legal, or financial advice.
This guide was prepared in March 2026 using HMRC's software selection tool at tax.service.gov.uk/find-making-tax-digital-income-tax-software. Software compatibility, features, pricing, and HMRC recognition status change regularly as vendors develop their MTD capabilities. Always verify current details directly with HMRC's tool and individual vendors before purchasing. This guide does not constitute tax, legal, or financial advice. If you are unsure which items apply to your tax return, consult a qualified accountant.
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