With just over a month until HMRC’s Making Tax Digital (MTD) for Income Tax changes take effect, new research from Monzo Business suggests sole traders spend an average of 27 hours a year on tax administration — equivalent to more than three working days.
The digital bank, which supports more than 800,000 business customers, has launched a free, built-in tax tool powered by Sage’s embedded accounting technology. The tool is designed to help sole traders and landlords comply with the new quarterly digital reporting requirements, which come into force from the start of the new tax year on 6 April.
Under MTD rules, affected businesses must use approved digital systems to submit quarterly updates of income and expenses to HMRC. While 70% of surveyed sole traders say they are aware of the changes, 28% report they are not confident their business will be ready. A further 69% say they do not currently pay for any digital tools to assist with their taxes.
Monzo’s research also highlights the time burden associated with compliance. More than half (54%) of sole traders surveyed spend two hours or more each month on tax administration, contributing to the 27-hour annual average. Based on the UK’s 2026 minimum wage, Monzo estimates that time equates to approximately £343 per sole trader each year.
The study draws a cultural comparison. With 88% of respondents saying they take a hot drink break during the workday, and the average tea or coffee break lasting 11.7 minutes, those 27 hours of annual tax administration equate to 138 missed drink breaks. Coffee is the most popular choice among small business owners, selected by 77% of respondents, followed by black tea (44%) and hot chocolate (43%).
Monzo Business says its new tool is intended to reduce manual administration by categorising transactions automatically, tracking income and expenses in real time, and consolidating tax preparation within its existing banking platform.
“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,” said 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. Nearly half (44%) admit they have submitted a tax filing late because the process felt too confusing or time-consuming.
Monzo confirmed its HMRC-recognised tax tool will be fully available before the new tax year begins and will be accessible across all free and paid Monzo Business account plans.
Further information is available here.
