Monzo Business Simplifies Tax Filing with New Free Tool as Sole Traders Lose Hours Monthly on Tax Admin and MTD Approaches

WHY THIS MATTERS: The approaching deadline for HMRC’s Making Tax Digital mandate represents a critical moment for the UK’s micro-business sector, where the combination of mandatory quarterly reporting and widespread unpreparedness is creating immense friction. This launch by Monzo and Sage is a powerful demonstration of applied embedded finance, fundamentally reframing compliance from a separate, time-intensive administrative chore—which costs sole traders an estimated 27 hours annually—into a seamless, free feature of everyday business banking. By absorbing the complexity of mandated reporting directly into the current account interface, the digital bank is strategically positioning itself as the essential, no-cost compliance platform for small businesses. This proactive integration leverages the transactional relationship to solve a high-stakes regulatory compliance problem, offering a critical de-stressing function for a customer base where 52% find tax management stressful

With just over one month to go until HMRC’s Making Tax Digital (MTD) for Income Tax changes come into effect, new research from Monzo Business reveals sole traders spend an average of 27 hours a year on tax admin – more than three full working days. The digital bank, which supports over 800,000 business customers, is helping make this shift easier for sole traders with a new free built-in tax tool, powered by Sage’s embedded accounting technology, freeing up time for more tea breaks and less stress.

Under the new MTD rules, sole traders and landlords will need to use approved digital systems to submit quarterly income and expenses updates. As the new tax year is around the corner, 70% of surveyed sole traders say they’re aware of MTD. However, 28% aren’t confident their business will be ready, and 69% don’t currently pay for any digital tools to help with their taxes.

More Tea Time, Less Tax Time

Time is precious for Britain’s smallest businesses, yet more than half (54%) of surveyed sole traders spend two hours or more each month on tax admin alone, adding up to an average of 27 hours a year. Based on the UK’s 2026 minimum wage, that time costs the average sole trader around £343 annually*.

Brits are known for loving a ‘cuppa’, so it’s no surprise that almost nine in ten (88%) say they take a hot drink break during the work day. Based on the average sole trader tea or coffee break lasting 11.7 minutes, those 27 hours on tax admin add up to 138 missed drink breaks a year. And when it comes to what’s in the mug, coffee is the clear favourite, chosen by over three in four (77%) small business owners as their regular hot drink, followed by black tea (44%) and hot chocolate (43%). 

Making tax digital, simple and built into everyday banking

Monzo Business helps sole traders stay on top of their finances year-round by categorising transactions, tracking income and expenses in real-time, and making it easier to prepare for tax, all in one place. By reducing manual admin and removing the need to juggle spreadsheets or paperwork, Monzo is helping sole traders feel more confident and better prepared for MTD – freeing up time for what matters most.

“Sole traders already work incredibly hard, often at the expense of their own time and wellbeing. With Making Tax Digital coming soon, we want to make sure people feel supported – not overwhelmed,” commented Jordan Shwide, General Manager at Monzo Business. “By building a simple tax tool directly into everyday business banking, we’re helping sole traders save hours of admin each month. That means less stress, fewer late nights, and maybe even time for an extra coffee break or two.”

More than half (52%) of sole traders surveyed say managing business taxes and accounting is stressful, and nearly half (44%) admit they’ve submitted a tax filing late because the process felt too confusing or time-consuming. Monzo Business’ free HMRC-recognised tax tool, powered by Sage, will be fully available before the new tax year starts on April 6. The tax tool is available to use on all free and paid Monzo Business account plans. Sole traders and landlords can find out more information here.

FF NEWS TAKE: This move decisively moves the needle in the SME banking competition by making essential regulatory compliance tools free and frictionless. The Monzo/Sage partnership sets a high bar for deep integration, forcing rival institutions to quickly integrate similar complimentary solutions or risk losing accounts to a superior digital experience. We should closely monitor the rate of MTD readiness adoption among Monzo’s 800,000 business customers. If this strategy successfully converts the 28% of sole traders who are currently unconfident about MTD, it will validate the model of integrating mandated accounting technology directly into the core financial platform