Making Tax Digital for Counsellors: I’ve Now Submitted My First Quarterly Update
Back in March, I wrote about Making Tax Digital for counsellors and psychotherapists and how I was preparing for the changes coming into effect from April 2026.
At the time, I had decided that I wanted to continue using my existing Excel spreadsheet rather than move my entire private practice over to accounting software.
I also said I would report back once I had actually completed my first Making Tax Digital quarterly update.
Well, I’ve done it.
The actual submission was relatively simple. Getting everything set up was considerably more fiddly.
Can counsellors still use Excel for Making Tax Digital?
This was one of my biggest questions when I first started looking into MTD. I have kept the accounts for my counselling practice on spreadsheets for years. They are straightforward, I understand them and I can see exactly what is happening in my business. I didn’t particularly want to change the whole system simply because HMRC had introduced a new way of reporting.
The good news is that you can still use Excel for Making Tax Digital, provided you use compatible software to send the required information to HMRC. I chose VitalTax, which works as an Excel add-in and acts as a bridge between my spreadsheet and HMRC.
So my bookkeeping hasn’t really changed.
I still record my counselling income and business expenses in Excel. VitalTax simply takes the relevant totals from my spreadsheet and submits them electronically. Having now used it for real, I’m pleased I decided to keep my existing system.
What do you actually submit to HMRC every three months?
This part was much less daunting than I had imagined. A Making Tax Digital quarterly update is not another full tax return. For a relatively small private counselling practice, the information HMRC needs during the year can be quite simple.
My turnover is below the threshold at which I need to provide a detailed breakdown of every category of expenditure, so I was able to use consolidated expenses.
In practice, that meant submitting:
- my total business income
- my total allowable business expenses for the quarter
That was it.
Once I eventually reached the correct screen in VitalTax, I linked the relevant cells in my Excel spreadsheet, checked the figures and submitted them. The submitting part probably took minutes. Finding the submitting part was another matter.
The difficult bit wasn’t doing my accounts
If I could give one piece of advice to another counsellor approaching their first MTD deadline, it would be this:
Set your software up before submission day.
I had already done my bookkeeping. My income was recorded. My expenses were recorded. I knew what figures I needed to submit. Yet somehow I still managed to spend about two hours going backwards and forwards between Excel, VitalTax and HMRC. There were accounts to activate, permissions to grant, income sources to find and spreadsheet cells to link.
At one point I think Making Tax Digital was testing my emotional resilience more than my ability to keep accounts. Eventually I walked away from the laptop for a while. When I came back, I got it sorted. There may be a lesson in there that has absolutely nothing to do with tax.
The encouraging part is that much of this was one-off setup. Next quarter, my account is already authorised and I now know where everything is.
I am certainly not leaving it until deadline day again.
Why I still prefer Excel for my counselling practice
Going through the process has actually reinforced my decision to continue using a spreadsheet. My accounts are not complicated, but real life doesn’t always fit neatly into accounting software categories. For example, I recently paid for business travel and subsequently received most of the money back as a refund. I have also paid for professional training where there have been deposits, later payments and refunds.
In Excel, I can see exactly what happened and record the refund against the original expense so that my accounts ultimately show the amount the business actually cost me. I also have some funding towards professional training due later in the year. Keeping my own spreadsheet means I can clearly record these transactions and understand what the figures represent rather than simply accepting whichever category an app has assigned them. For me, that visibility matters.
Making Tax Digital has made me look more closely at my records
One unexpected benefit of MTD is that it has made me look more carefully at my bookkeeping generally.
When you only complete a tax return once a year, it is surprisingly easy to think:
“I’ll sort that out later.”
And then twelve months later you are staring at a bank transaction trying desperately to remember what you bought. Quarterly reporting gives you much less opportunity to do that. I’m therefore becoming more disciplined about keeping invoices, saving receipts and making a note of anything that might not be obvious when I look back at it later. I’m not pretending I have suddenly transformed into an enthusiastic bookkeeper.
But it does make sense.
What happens if your counselling income varies?
This year has also reminded me that private practice income isn’t necessarily consistent. Counsellors take holidays. Clients finish therapy. Referrals fluctuate. Sometimes life intervenes and we have to take time away from work. My own income this quarter was lower than it would normally be because I had a period away from my practice. That doesn’t create a problem with MTD. The quarterly update is simply reporting what actually happened during that period. You are not expected to earn exactly the same amount every three months.
That sounds obvious, but I think it is worth saying because seeing your income written down quarter by quarter can make ordinary fluctuations look more dramatic than they really are.
Is Making Tax Digital as bad as I thought?
No.
Do I think the whole system could be easier to understand?
Absolutely.
But now that I have completed my first quarterly update, I feel considerably less concerned about it. The biggest relief is that I haven’t had to redesign the way I run my private practice.
I can still use Excel.
I can still keep my accounts in a format I understand.
And I am not completing another full Self Assessment tax return every three months. Once the software was finally connected properly, the actual submission was remarkably straightforward.
So my advice to other counsellors and psychotherapists preparing for their first Making Tax Digital quarterly update is simple:
Get the software connected before the deadline.
And if you find yourself going round in circles, walk away from the computer for half an hour. That turned out to be surprisingly effective too.
This article describes my own experience of Making Tax Digital as a self-employed counsellor. It is not tax or accountancy advice. Check current HMRC guidance or seek professional advice if you are unsure how the rules apply to your own practice.