How to Create Custom Copilot Skills in Excel: SKILL.md Setup and Troubleshooting

This guide covers what a skill is, the folder structure and file format Excel expects, how to call a skill, and the mistakes most likely to stop it from working.

What skills are, and where they came from​

Microsoft introduced the feature in June 2026 as part of a finance-focused Copilot in Excel update. In its announcement, Microsoft said skills let teams define how Copilot should handle common processes such as building a DCF, closing the books, refreshing a monthly reporting model, or preparing a variance analysis. The promise was that you can build your own custom skills using an open-standard markdown file. Save a SKILL.md file in your OneDrive, and Copilot will pick it up.

Availability: Microsoft's blog said that custom skills are available today via the Insiders channel for Windows and Mac, and rolling out to general availability across Excel for Web, Windows, and Mac next month. The other features in that announcement were listed as generally available for Microsoft 365 Copilot customers across Excel for Web, Windows, and Mac.

Licensing: Geeky Gadgets says you need an M365 Copilot license. That matches how Microsoft markets the feature. However, the Microsoft support pages that explain skills don't spell out an exact licensing rule. If you're an admin, check what your tenant actually shows before you promise this to the finance team.

Microsoft's support page describes skills as a way to give Copilot what it needs for repeatable work such as reconciling accounts, analyzing data and formatting workbooks. Microsoft also provides built-in skills you can use straight away:

• @brandkit – follows brand guidelines
• @chart-design – creates or edits charts
• @clean-data – finds and fixes data problems
• @skill-builder – turns a recurring workflow into a custom skill
• @theme-design – applies Excel themes

In short: a skill is a saved set of instructions in Markdown. It is not a macro and it is not code. Copilot reads it and follows it as guidance.

Step-by-step: creating a custom skill by hand​

Microsoft's support documentation describes this path for creating a skill manually:

1. Open the Copilot pane in Excel.
2. Select the Settings menu (the … in the upper-right corner).
3. Select Manage plugins & skills.
4. Select Custom skills.
5. Select Create OneDrive folder. Copilot creates the skills folder for you.
6. Select Open skills folder. Your OneDrive opens to that folder.
7. Inside the skills folder, create one subfolder for each skill.
8. Put a file named SKILL.md in each subfolder.
9. Go back to Excel and select Refresh in the Custom skills dialog so Copilot finds the new skill. Turn the skill on if it isn't already.

Where the folder lives: Excel University says the folder appears at Documents > Copilot > Microsoft Excel > skills. Excel Off The Grid's demo also found an example skill already in the folder, named something like "makecal." Excel University's screenshots show a matching folder called "make-calendar.example."

How long it takes: in the walkthrough, the folder showed up in OneDrive about 4–5 seconds after clicking create. That was one person's experience, not a promise from Microsoft. If you don't see it, wait for OneDrive to sync and refresh the page.

Why it's still manual: the walkthrough complained that the Add button doesn't build folders or files for you. In Microsoft's documentation, the Add menu in the prompt box is mainly where you pick a plugin or skill to use (Choose plugins and skills). Setting up the folder happens under Settings. So the complaint is fair, but those two menus do different jobs.

The SKILL.md format: what Excel actually checks​

This is the part most likely to break, so the details matter. According to Microsoft, every SKILL.md file has two sections:

• Front matter (required). This goes at the top, with a line of three dashes (---) above and below it. It holds a name and a description. The description is important: Copilot uses it to decide when the skill applies.
• Body. Everything after the front matter is your instructions, written in Markdown. Microsoft says there are no format restrictions here.

Microsoft's example is a skill named create-table-bold-first-column. Its description says to use the skill when you ask Copilot to create a table. The body tells Copilot to bold the first column afterwards. That file only works if it sits in a folder also named create-table-bold-first-column.

The rule that catches most people: the folder name must exactly match the name in the front matter. If they don't match, Copilot skips the skill without an error. Microsoft even suggests renaming the folder on purpose as a way to hide a skill without deleting it.

Microsoft's examples use lowercase words joined by hyphens. That differs from the walkthrough, which used names with spaces, such as "finance commentary writer". Other users have hit naming problems too. Writing in the M365 Copilot Connection newsletter, one author said Copilot in Excel does not make this easy, and I hit some errors — naming mismatches. Their advice is one hyphenated folder name per skill, with SKILL.md in caps inside it. Microsoft writes the filename as SKILL.md, so use that exact capitalisation rather than "skill.md".

For advanced users: Microsoft says a skill can also include optional scripts, references and assets folders. These can make results more predictable, but you don't need them for a skill that's just text instructions.

Inside the "finance commentary writer" demo​

The demo's SKILL.md body included:

• sentence patterns for the commentary
• standard terms, such as "favorable" and "adverse"
• a variance threshold
• an instruction not to calculate anything, and to use only the numbers already visible on the worksheet

The skill was called with an @mention and pointed at these cells:

• Income in G7
• Gross profit in G9
• Overheads in G17
• EBIT in G19

Reported results:

• An income variance of 682 was described as "broadly in line with budget" because it was under the 1% threshold.
• A gross-profit variance of 659 was labelled "adverse to budget" because it was over 1%.
• The prompt also contained a mistake: it gave G19 when it meant the overheads cell. Copilot still found the overheads figure in G17.

What the interface showed: Copilot wrote the commentary straight into the worksheet and put a rainbow-coloured border around the changed cells. It then showed a "done" message and an Undo option. The presenter felt the text suited an email or a report cover better than a worksheet cell.

How much this proves: these are claims from one demo. The workbook isn't public, so nobody can check how the percentages were worked out. A 682 variance being "in line" while 659 is "adverse" makes sense only if the budget bases are very different, which is plausible for income versus gross profit. The interface details aren't in Microsoft's documentation either, so your Excel build may look different.

The "don't calculate" instruction is a sensible design choice. It keeps Copilot describing your numbers rather than producing its own. It doesn't mean Copilot checked the arithmetic.

In short: the demo shows a well-written skill can produce consistent, on-style commentary. It doesn't show the commentary can go into a board pack without review.

Easier ways to build a skill​

The walkthrough suggests hand-writing files is the only way to make a skill. Microsoft's documentation describes two other options, though both are still rolling out and may not be available to you yet:

• @skill-builder creates a skill from your instructions, earlier prompts, examples of finished work, or a workflow you complete with Copilot. You can preview and refine it before it's saved to OneDrive. A recent WindowsForum walkthrough summed it up: Skill Builder gets rid of writing SKILL.md by hand, and the files it produces are plain Markdown in your OneDrive that you can read and edit.
• Record a skill works a bit like Excel's macro recorder. You do the task once while Copilot records your changes. Copilot then asks follow-up questions and turns the recording into instructions instead of code. Values and cell addresses from your recording are treated as examples rather than fixed requirements. Two cautions from Microsoft:
  • Cancelling a recording does not undo the changes you made to the workbook.
  • If the task only applies to one workbook, you can save it as rules on a .Rules worksheet instead. Those rules stay with the workbook and travel with it when you share it.

Fixing common problems, and team rollout​

If a skill doesn't appear:

1. Check that the folder name exactly matches the name in the front matter.
2. Check the file is named SKILL.md.
3. Check the front matter has a --- line above and below it.
4. Select Refresh in the Custom skills dialog.

If Copilot ignores a skill: improve the description, because that's how Copilot decides when to use a skill. Turning a skill off in Manage plugins & skills only stops Copilot from using it automatically. Calling it directly with an @mention still works.

Sharing with colleagues: skills are personal. Excel University notes that custom skills are personal and stored in each user's own OneDrive. To share one, send the file so each person can copy it into their own skills folder. Microsoft's documentation also mentions using skills "created by your organization."

Checking the output: Microsoft warns that skills may behave differently across models and over time, and says to verify the results every time. For financial commentary, put these in the skill itself:

• which cells or tables to use
• what each variance compares against
• whether the threshold includes the boundary value (is exactly 1% in line or adverse?)
• the wording you want
• whether Copilot may calculate anything

Bottom line: custom skills are a cheap way to make Copilot follow your house style, and anyone who can write a numbered list can create one. Just treat what they produce as a first draft for a person to review.