Digital bank Monzo is partnering with accounting technology firm Sage to launch a new, built-in tax filing tool aimed at sole traders and landlords. The feature will allow Monzo Business customers to file tax returns directly to HM Revenue & Customs (HMRC) from within their banking app, a move designed to simplify compliance with the UK’s upcoming Making Tax Digital (MTD) for Income Tax legislation.
A waitlist for the new tool opens today, with the full product expected to launch in time for the new tax year when the MTD rules come into effect. The solution is powered by Sage’s Embedded Services technology, which brings accounting and tax compliance capabilities into the platforms that businesses already use.
Addressing the Making Tax Digital challenge
The new tool is designed to address the challenges posed by HMRC’s MTD initiative, which will require sole traders and landlords to keep digital records and submit quarterly tax updates using approved software. According to research from Sage, almost half (49 per cent) of sole traders are still unaware of the MTD changes, while over half (55 per cent) of those who are aware fear the administrative burden of the new quarterly submission requirements.
Monzo’s integrated solution aims to reduce this complexity and cost by eliminating the need for separate accounting software. The tool will complement existing features within the Monzo Business account, such as spending categorisation, receipt attachment, and ‘Tax Pots’ for setting money aside. This allows customers to prepare for, save for, and file their taxes within a single application.
“Managing taxes is one of the biggest headaches for sole traders and landlords,” said Jordan Shwide, general manager of business banking at Monzo. “That’s why we’re making tax filing simple with a built-in tool, powered by Sage, that lets customers file directly to HMRC from their Monzo Business bank account. This is yet another step in building the one app that helps small and growing businesses confidently manage all of their business finances with Monzo.”
Embedded finance for tax compliance
The partnership is an example of Sage’s strategy to meet small businesses where they are by embedding its services into their existing financial tools. The company’s Embedded Services technology uses a modular suite of APIs to allow partners like Monzo to integrate accounting and compliance features directly into their own platforms.
“For small businesses, tax can feel complicated, but through our embedded accounting technology and our partnership with Monzo we are making tax compliance simple and seamless inside the app they already use to run their finances,” said Gordon Stuart, svp, operations, fintech & embedded services at Sage. “This collaboration is a clear example of Sage Embedded Services in action, meeting customers where they are and enabling partners to deliver trusted services in the tools business owners already use every day.”
The MTD for Income Tax rules are part of a phased overhaul of the UK tax system. From April 2026, sole traders and landlords earning over £50,000 will be required to comply, with other earning brackets being phased in in subsequent years. Monzo currently has over 700,000 business customers.
