This strategic move comes just ahead of significant changes to the tax system scheduled for April. Under the government’s Making Tax Digital (MTD) for income tax initiative, self-employed individuals and landlords will soon be required to utilise approved digital platforms to submit quarterly updates on their income and expenses.

Despite the looming deadline, anxiety remains high among the self-employed sector. Research conducted by Monzo reveals that while 70% of sole traders are aware of the incoming regulations, over a quarter lack confidence in their readiness for the April transition. Furthermore, the financial burden of compliance is significant, with data suggesting that UK small businesses currently invest nearly £5 billion annually in various tax and accounting software packages.

To mitigate these challenges, the bank has leveraged Sage’s embedded services technology to create a free, HMRC-recognised tool. Available to any holder of a free Monzo Business account, the service enables users to submit tax updates directly through the app before the new tax year commences on April 6. With over 800,000 business customers, Monzo aims to streamline the process for those with straightforward tax needs.

Jordan Shwide, general manager of Monzo Business, said: “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.”