Key Point
"MTD compatible" means different things for different types of software. Full accounting packages submit directly to HMRC. Invoicing software creates digital records that feed into your MTD workflow. Bridging software connects existing records to HMRC. Understanding these differences helps you build the right setup.
What "MTD Compatible" Means
When software claims to be "MTD compatible," it can mean one of several things. HMRC recognises software that can perform specific functions within the MTD ecosystem:
Full MTD Software
Keeps digital records and submits quarterly updates to HMRC via their API.
Examples: Xero, QuickBooks, Sage, FreeAgent
Bridging Software
Takes data from other sources (spreadsheets, invoicing tools) and submits it to HMRC. Doesn't store records itself.
Examples: Tax bridging apps, HMRC-approved submission tools
MTD-Ready Record-Keeping
Creates and stores digital records that meet HMRC requirements but doesn't submit to HMRC directly. Needs bridging software or accounting integration.
Examples: Invoicing software like Experi, specialist record apps
Bridging Software vs Invoicing Software
These are fundamentally different tools that serve different purposes:
Invoicing Software
- Purpose: Create and send professional invoices to clients
- Records: Stores all invoice data — dates, amounts, clients, line items
- MTD role: Creates the digital income records that MTD requires
- HMRC submission: Does not submit to HMRC directly
- Exports: Data can be exported to accounting or bridging software
Bridging Software
- Purpose:Submit data to HMRC's MTD systems
- Records:Takes data from other sources, doesn't create invoices
- MTD role: Handles the submission and communication with HMRC
- HMRC submission: Submits quarterly updates and final declarations
- Input: Reads from spreadsheets, CSVs, or other software
Most sole traders need both capabilities — a way to create digital records (invoicing or accounting software) and a way to submit those records to HMRC (accounting software with MTD submission or separate bridging software).
How Experi Fits Into Your MTD Workflow
Experi is professional invoicing software that creates compliant digital records — but it's not bridging software. Here's how it fits into the MTD picture:
- 1Create Invoices: Use Experi to create and send professional invoices to your clients
- 2Digital Records Stored: Every invoice is stored with the date, amount, client, and details HMRC requires
- 3Export Your Data: Export invoice data as CSV or PDF for your accounting or bridging software
- 4Submit to HMRC: Your accounting or bridging software submits quarterly updates to HMRC
What to Look for in MTD-Ready Invoicing Software
Not all invoicing tools are created equal when it comes to MTD readiness. Here's what matters:
Comprehensive Digital Records
The software should record every invoice with the date, amount, client name, description, and payment status — automatically, without extra data entry.
Easy Data Export
Look for CSV export, API access, or direct integrations with accounting software. Your invoice data needs to flow into your MTD submission tool without manual re-typing.
VAT Handling (If Applicable)
If you're VAT-registered, your invoicing software should correctly calculate and record VAT on each invoice. This data feeds into both MTD for VAT and MTD for ITSA.
Payment Tracking
Knowing which invoices are paid vs outstanding helps you accurately report income for each quarter. Software that tracks payment status saves you time at reporting.
Searchable History
You need to quickly access invoices by date range, client, or amount for quarterly reporting. A searchable, filterable invoice history makes this straightforward.
Common MTD Software Setups
Here are the most common ways sole traders structure their software for MTD compliance:
Option 1: All-in-One Accounting Software
Use Xero, QuickBooks, or similar for invoicing, record-keeping, and HMRC submission — everything in one tool.
Best for: Businesses that want a single system
Option 2: Invoicing Software + Accounting Software
Use dedicated invoicing software (like Experi) for client-facing invoices, then export data to accounting software for MTD submission.
Best for: Businesses that want professional invoices and separate accounting
Option 3: Spreadsheets + Bridging Software
Continue using spreadsheets for records and use bridging software to submit quarterly updates to HMRC.
Best for: Businesses comfortable with spreadsheets who want minimal change
Professional Invoicing, MTD-Ready Records
Experi creates beautiful, professional invoices and stores every detail digitally. Export your invoice data to your accounting software and you're ready for quarterly reporting.
Start Free — No Credit Card RequiredFrequently Asked Questions
What does "MTD compatible" mean for invoicing software?
For invoicing software, "MTD compatible" means it creates digital records of your income that meet HMRC's requirements — including transaction dates, amounts, and categories. However, invoicing software alone typically cannot submit quarterly updates to HMRC. You also need accounting or bridging software for the submission part.
What is the difference between bridging software and invoicing software?
Bridging software connects your existing records (spreadsheets, invoicing tools) to HMRC's MTD systems and submits quarterly updates on your behalf. Invoicing software creates and sends invoices to your clients and maintains digital income records. You may need both: invoicing software for creating records and bridging software for submitting them to HMRC.
Is Experi MTD bridging software?
No. Experi is invoicing software that creates professional digital invoices and maintains detailed income records. It's not a bridging tool and doesn't submit quarterly updates to HMRC. However, Experi's digital records can be exported and used with your chosen MTD bridging or accounting software.
Do I need separate invoicing and accounting software for MTD?
It depends on your setup. Some accounting packages (like Xero or QuickBooks) include invoicing features and can submit to HMRC directly. If you prefer dedicated invoicing software like Experi for creating professional invoices, you can export your data into MTD-compatible accounting software for quarterly submissions.