Sole traders are spending the equivalent of more than three working days each year dealing with tax administration, as the rollout of Making Tax Digital (MTD) for Income Tax approaches.
Research from Monzo Business found that sole traders devote an average of 27 hours annually to tax-related admin — around two hours a month for more than half of those surveyed. Based on the 2026 minimum wage, that time equates to approximately £343 in lost productivity.
The findings come just weeks before HMRC’s MTD for Income Tax rules take effect, requiring sole traders and landlords to submit quarterly digital updates of income and expenses using approved software.
While 70 per cent of those surveyed said they were aware of the upcoming changes, 28 per cent admitted they were not confident their business would be ready. Nearly seven in ten currently do not pay for digital tools to manage their tax affairs.
More than half of respondents said handling business taxes and accounting causes stress, and 44 per cent admitted submitting a tax return late because the process felt too confusing or time-consuming.
The changes form part of HMRC’s wider Making Tax Digital programme, which aims to modernise the UK tax system and reduce errors through digital record-keeping and submissions.
Monzo Business, which serves more than 800,000 business customers, is launching a free built-in tax tool powered by Sage’s embedded accounting technology. The bank says the tool will allow users to categorise transactions, track income and expenses in real time and prepare for quarterly submissions without relying on spreadsheets.
Jordan Shwide, general manager at Monzo Business, said: “With Making Tax Digital coming soon, we want sole traders to feel supported, not overwhelmed. By building a simple tax tool directly into everyday business banking, we’re helping reduce admin and stress.”
The research highlights the time constraints faced by the UK’s smallest businesses. Nearly nine in ten sole traders said they take regular tea or coffee breaks during the day, yet the 27 hours spent on tax administration equate to around 138 missed hot drink breaks annually.
As the new tax year approaches, accountants and business groups have urged sole traders to review their systems and ensure they are compliant with digital reporting requirements.
For many, the success of Making Tax Digital will depend not only on awareness but on whether accessible tools can reduce administrative burden rather than add to it.
