800,000 Monzo customers handed good news ahead of big HMRC change | Personal Finance | Finance
Monzo said it was HMRC-approved (Image: SOPA Images, SOPA Images/LightRocket via Getty Images)
Fresh analysis from Monzo has revealed that British small businesses spend almost £5 billion (£4.8 bn) annually on tax and accounting software. With HMRC’s Making Tax Digital (MTD) for Income Tax reforms taking effect in April, Monzo announced it is helping to make quarterly submissions and end-of-year tax returns “simpler and more accessible for Britain’s smallest businesses” through the introduction of a complimentary HMRC-approved tax tool.
The forthcoming MTD regulations will mandate that sole traders and landlords utilise approved digital platforms to file quarterly income and expenditure updates. While Monzo’s recent analysis indicates seven in 10 (70%) sole traders are aware of the impending MTD changes, more than one in four (28%) admitted they lacked confidence about being prepared for April.
Nevertheless, almost two-thirds (61%) indicated that simpler or more integrated solutions would facilitate tax filing. To assist sole traders and landlords in their preparations, Monzo, the digital bank serving over 800,000 business customers, confirmed it is introducing a free HMRC-approved tax tool, powered by Sage’s embedded services technology, which will be fully operational before the new tax year commences on April 6.
The solution enables anyone holding a free Monzo Business account to file tax updates directly to HMRC through the Monzo app, providing a straightforward, in-app submission option for basic requirements, whilst many enterprises will continue utilising comprehensive accounting software and professional advisory services as their operations expand. Tax administration can be a significant stressor for those who are self-employed.
Research indicates that over half (52%) of sole traders find managing business taxes stressful, and nearly half (44%) have admitted to late filing due to the process being too confusing or time-consuming. On average, sole traders dedicate approximately 25 hours annually to tax administration – equivalent to more than three full working days that could be better spent growing their businesses or spending quality time with family and friends.
Monzo has around 800,000 business customers (Image: Bloomberg, Bloomberg via Getty Images)
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Jennifer Staves, deputy director of strategic design: Making Tax Digital at HMRC, said: “Making Tax Digital for Income Tax will help people keep clearer records and get their tax right. Using software which has been recognised and approved by HMRC will make it easier for sole traders and landlords to meet the new requirements and be ready ahead of April 2026.”
Jordan Shwide, general manager at Monzo Business, said: “Making Tax Digital is designed to make tax simpler, but we know many sole traders feel overwhelmed by what these changes mean for them. By launching a free, HMRC-recognised tax tool, in partnership with Sage, we’re making it easier for sole traders to send tax updates straight from their bank account, so they can feel stress-free and confident in April.”
Gordon Stuart, SVP, fintech and embedded services at Sage, said: “For small businesses, tax can often feel more complicated than it needs to be. By embedding trusted tax and compliance tools into everyday banking, we’re helping simplify tax and reduce friction, so people can feel more confident as Making Tax Digital approaches.”
Making Tax Digital (MTD) for Income Tax is an HMRC initiative that requires businesses and self-employed individuals to maintain digital records and submit updates through approved software. Over the coming three years, nearly three million sole traders and landlords must transition to third-party digital tax tools.
This represents a phased overhaul of the UK tax system. From April 2026, sole traders and landlords with earnings exceeding £50,000 will be required to comply.
Those earning above £30,000 and £20,000 will need to meet MTD requirements by April 2027 and April 2028 respectively. Further details are available on the UK Government’s website.
Monzo’s integrated tax tool, powered by Sage, will become available for the new tax year when MTD takes effect. The tax tool can be accessed on all free and paid Monzo Business account plans. Sole traders and landlords can obtain additional information on the Monzo Business website.
Methodology
Survey responses were categorised into monthly spending ranges, with each range assigned a midpoint to represent typical spend. Using this standard grouped-data method, the estimated average monthly spend on tax tools is £71 per business.
This was combined with the UK Government’s Business Population Estimates 2025, which states there are approximately 5.64 million UK small businesses. At an average spend of £71 per month, these 5.64 million businesses collectively spend approximately £4.8 billion per year on tax tools.
The research was conducted by Censuswide, among a sample of 2,000 small business owners (up to 50 employees). The data was collected between December 15, 2025, and December 23, 2025.
Censuswide abides by and employs members of the Market Research Society and adheres to the MRS code of conduct and ESOMAR principles. Censuswide is also a member of the British Polling Council.
