New research from Monzo, the digital bank with over 800,000 business customers, reveals British small businesses invest £4.8bn every year in tax and accounting software.
With Making Tax Digital (MTD) for Income Tax due to be introduced in April, Monzo has announced the launch of a free, HMRC-recognised tax tool designed to support users with submitting quarterly updates and end-of-year tax returns.
The new MTD rules will require sole traders and landlords to use approved digital systems to submit quarterly income and expenses updates. While Monzo’s latest research shows 7 in 10 (70%) sole traders are aware of the upcoming MTD update, over 1 in 4 (28%) say they’re not confident they’ll be ready for April.
Nearly two thirds (61%) of respondents said that simpler or more integrated tools would make tax filing easier, suggesting demand for solutions that combine banking and tax-related functions.
Monzo’s new tool, powered by Sage’s embedded services technology, will be available before the new tax year begins on 6 April. It will be free to use for customers with a Monzo Business account and is recognised by HMRC.
The tool enables eligible users to submit tax updates directly to HMRC from within the Monzo app. It is intended for straightforward tax needs, while businesses with more complex requirements may continue to rely on dedicated accounting software and professional advisors.
Tax administration remains a challenge for many self-employed people. Half (52%) of sole traders surveyed by Monzo said they find managing business taxes stressful, and 44% reported having filed late because they found the process confusing or time-consuming. On average, sole traders spend around 25 hours a year on tax administration — more than three working days.
