Monzo Launches Free Tax Tool Ahead of UK Digital Filing Deadline

Britain’s Making Tax Digital for Income Tax regime requires sole traders and landlords to maintain digital records and send quarterly income and expense updates through HMRC-compatible software. The first phase starts April 6, 2026, for those with qualifying income above £50,000, before thresholds fall to £30,000 in 2027 and £20,000 in 2028. The shift matters because it will bring nearly 3 million taxpayers into digital reporting over three years, adding compliance pressure for small operators that often manage their own books.

Monzo Business has rolled out free, HMRC-recognised tax software powered by Sage, making it available across free and paid plans to its more than 800,000 business customers. The in-app service categorises transactions, tracks income and expenses in real time and lets users submit updates directly to HMRC. Monzo research found 54% of sole traders spend at least two hours a month on tax administration, averaging 27 hours and about £343 a year, while 28% were not confident they would be ready. The bank said the tool would be fully available before April 6, 2026.