UPDATED: Please note that some banks are taking longer than normal to process business account applications. More details will be provided on their websites.
UK Finance has teamed up with UK banking providers to pull together some guidelines on what you need before you apply for a small business bank account.
These rules only apply to existing businesses that have a turnover of less than £6.5 million, have a clearly defined ownership structure and all of the business’ owners operate in the UK.
In general, UK Finance recommends that you get the following bits of documentation ready in advance. Most business current account providers will be looking a few key pieces of information.
One document to prove your identity:
- Your full and valid UK or foreign passport
- Your national identity photocard
- Your full UK paper driving licence
- Your full UK or foreign photocard driving licence as issued by a member state of the EU or the EEA
One document to prove your address in the UK:
- Your full UK driving licence;
- Your full UK or foreign licence photocard driving licence as issued by a member state of the EU or EEU;
- UK or foreign bank or credit-card statement (must be less than three months old and not printed from the internet);
- UK mortgage statement (less than 12 months old and not printed from net);
- Council tax bill, payment book or exemption certificate (must be less than 12 months old);
- A letter or bill from a utility company (less than six months old, avoid mobile phone bill).
Business-wise, you’ll need:
- Your Companies House registration number (if you have one)
- Details about your business including turnover, tax information and other capital
- Details of all company directors or partners, including name, date of birth, address and National Insurance number
You can move through this guide on UK Finance to make sure you meet the requirements.
Once you’ve collected your documents, it’s time to choose an account. We’ve rounded up some of the favourites on the market.
To give you an idea of what to expect, we’ve created a table of the best business bank accounts in the UK, detailing each provider’s key offerings for small businesses.
Best small business bank accounts 2022
|Bank||Eligibility||Free banking period||Account fee thereafter|
|Barclays||Suitable for most businesses with a turnover of up to £6.5 million. Specific criteria for businesses in certain sectors e.g. agriculture, social housing||12 months||£8 a month (Mixed Payments Plan) £8.50 a month (e-Payments Plan)|
|Co-Operative Bank Business Direct Plus||Customers must be £1,000 in credit at all times to qualify for free banking||30 months||£7 a month|
|Co-Operative Bank FSB banking account||For Federation of Small Businesses members||Free|
|HSBC Kinetic||For single-director limited companies or sole trader with turnover up to £2m||12 months||£6.50 a month|
|HSBC Small Business Banking Account||Turnover below £2m and your business does not wish to borrow more than £30,000||12 months||£8 a month|
|Lloyds||Start-Up and Small Business Account is aimed at businesses with estimated turnover of up to £3m||12 months||£7 a month|
|Metro Bank||Businesses must have a turnover under £2 million||Free for account balances over £6,000||£6 a month|
|NatWest Business Bank Account||Suitable for businesses with turnover of £1m+ with more transactions||No - standard tariff applies||Free|
|NatWest Start-up Account||For businesses with turnover of less than £1m||18 months||Free|
|RBS Business account||For businesses that have been trading for over 12 months||No - standard tariff applies||Free|
|RBS Start-up account||For businesses with turnover of less than £1m||24 months||Free|
|Santander 1I2I3||Trading for less than 12 months and business is opening first business account with Santander||Discounted monthly fee of £5 for start-ups for 18 months and switchers for 12 months||£12.50 a month|
|Santander Business Current Account||Trading for less than 12 months and business is opening first business account with Santander||18 months||£7.50 a month|
|TSB||Open to sole traders, partners and directors||25 months||£5 (waived if your average balance in the month is £10,000 or more)|
|Virgin Money Business Current Account||Suitable for businesses with turnover of less than £6.5m||25 months||£6.50 a month|
|Virgin Money M Account||For businesses with an annual turnover less than £1 million||Permanent||n/a|
You’ll get free banking for 12 months with the Start-up Business Account. Plus, receive expert advice from Barclays’ Business Direct team in the early months for support in helping you grow. They’ll help you shape your business strategy, figure out your cash flow management and forecasting and guide you through lending and trading abroad.
Accounts for more established businesses are available to those with a turnover of up to £400,000 or between £400,000 and £6.5 million. You’ll get a monthly loyalty reward – this means you’ll get a proportion of the charges placed on your account back based on your annual credit turnover.
As for payment plans, both have a mixed payment plan that is great for businesses that use cash, cheques or mixed methods to make and receive payments – this plan has a £8 monthly fee. There’s also e-payment for those that receive electronic payments and make payments through online banking and debit cards, which costs £8.50 a month.
The Co-Operative Bank
The Co-Operative Bank offers all the standard service you would expect from a high street bank, including branch and online support, a UK-based telephone support team, and a mobile app. But it’s big differentiator is its ethical business policy and carbon-neutral credentials.
Best of all, new Business Directplus customers who keep their balance about £1,000 get 30 months of free banking with no monthly charge. If your balance falls below £1,000 at any point, you will be charged £7 a month.
HSBC has two options for sole traders and single directors of limited companies.
HSBC Kinetic is a mobile business banking app targeting a limited company with a sole director shareholder registered with Companies House or a sole trader.
This smartphone app-based business account is available for either Android or iPhone users.
- Debit card
- Freeze or unfreeze your card in case you lose it
- Make payments of up to £25,000 per day in-app
- Automatically categorised transactions to help monitor spending
- Set up and manage Direct Debits, standing orders and future payments
- Access via mobile or desktop
- Credit sard and savings account (subject to eligibility and application)
- View of monthly cash flow within your HSBC Kinetic account
- Insights that could help you manage your money better
- Apply for up to £30,000 overdraft in-app
A more traditional small business bank account from HSBC, aimed at sole traders and limited companies with turnover of up to £2m.
- Free banking for 12 months
- Visa debit card
- Loans from £1,000 to £25,000
- Visa commercial card – no annual fee for the first year
- Access to secure digital banking including the ability to scan and deposit your cheques via the Business Banking Mobile app
- Banking 24/7 online
- Syncs with Sage accounting software
- International payments for over 60 currencies
At £8 a month once the initial 12-month free banking period expires, the HSBC Small Business Banking Account costs £1.50 more than its sister HSBC Kinetic account for smartphone users. Our view is that if you’re happy using an Android or iPhone, it makes sense to embrace mobile banking.
Lloyds’ Start-Up and Small Business Account is aimed at small businesses with estimated turnover of up to £3m. Start-up or small business customers get 12 months of day-to-day banking for free whether you’re switching or opening a new account. It has free electronic payments and simple pricing structures. The monthly fee is £7 once the free banking period ends.
Lloyds also offers its Business Finance Assistant online accountancy package free for three months for new customers.
As well as bank accounts for larger businesses, Metro Bank has a specialist account for start-ups and SMEs which have a turnover under £2 million.
If your balance stays above £6,000 for the whole month, Metro Bank will waive your monthly account maintenance fee. Otherwise it’s £6 for that month. If you stay over £6,000 you get 30 fee-free UK transactions for a month with 30p per transaction in excess of that. Accounts that go below £6,000 will pay 30p per UK transaction.
Metro Bank also offer a free year’s worth of business support from Enterprise Nation.
The Start up Business Account is available for businesses that have been trading for less than 1 year and have a turnover of less than £1m.
The account offers the usual smartphone app and online banking but what sets Start-up Business Account apart is the free mentoring NatWest offers fledgling businesses, either through its Business Builder digital tool or its NatWest Accelerator programmes targeting start-ups in today’s high-growth (digital), climate, fintech and purpose-led sectors.
Plus NatWest Start-up Business Account bundles free FreeAgent accountant software subscription for all business customers.
No transaction fees for the first year and a half and standard transaction fees after that. But there is no monthly charge at all for a Start-up Business Account.
Like HSBC, NatWest has a mobile-first banking app, Mettle (see below). It has no monthly fees and no minimum transaction fee. It’ll be suitable for you if you’re a sole trader or a limited company with up to two owners.
NatWest Business Bank Account offers all the features of the Start-up Account plus a dedicated relationship manager to be your point of contact.
Again, there is no monthly fee but standard transaction charges do apply.
As well as access to the Entrepreneur Accelerator programmes and complimentary FreeAgent accounting software, you can apply to join Bankline through the Business Bank Account, a one-stop-shop dashboard which gives you an overview of activity with sign-ons for multiple users, giving you a realtime overview of your bookkeeping – ideal for businesses with a higher volume of transactions.
RBS’s Start-up Bank Account mirrors its sister bank NatWest’s start-up bank account, except that it offers two years’ worth of free banking without transaction charges, not 18 months.
In addition to the usual online and smartphone app banking, RBS Start-up Bank Account offers access to Tyl, NatWest’s own small business payments system.
Aimed at businesses that have been trading for at least one year, RBS Business Account again mirrors sister bank NatWest’s Business Bank Account, offering 24/7 online, telephone and mobile app banking, no minimum monthly charge, plus a dedicated relationship manager.
Again, there is free accounting software from FreeAgent, access to the Enterprise Accelerator Programme, and multiple account management through Bankline.
With Santander you’ve got a couple of options on the current account front.
This one’s open to you if you’ve been trading for less than 12 months and your business is opening its first business current account with Santander.
It comes with an arranged overdraft on an unsecured basis from £500 up to £25,000. To qualify you must have a good credit history and not have been declared bankrupt or have had an IVA within the past six years. On top of that, you must not have been a disqualified director of a failed business within the same time period.
After the first 18 months the account costs £7.50 a month with a cash deposit monthly limit of £1,000 and 70p per £100 deposited in excess of this monthly limit.
You can also nominate colleagues to have access to your account to help you manage the business finance.
There’s no minimum or maximum opening deposit or maximum balance to get started.
The main draw of the 1|2|3 Business Current Account is the cashback. The rate of cashback you receive is dependent on how much you deposit into your account each year and will be at a rate of 1-3 per cent. This cashback will be paid on the first £10,000 deposited into your account per year.
That’s 1 per cent on turnover of less than £200,000 – you’ll get up to £100 of cashback per year; 2 per cent on turnover of £200,000+ (£200 cashback per annum); 3 per cent on £300,000- (£300 cashback per annum).
Other than that, it’s much the same as the Business Current Account.
Whether you’re on the start-up or the switcher offer, you’ll be paying £5 a month in fees. After your first 18 months (12 months for switchers) you’ll be put on the £12.50 account which also has a £1,000 monthly deposit limit and 70p per £1000 in excess of that limit.
TSB’s Business Plus account has six months of free business banking for sole traders, partners and directors. It doesn’t matter if you’re switching or are opening a brand-new bank account.
After that you’ll be paying £5 a month which will be waived if your average balance over that month is £10,000 or more.
If you prefer to bank in-branch, there are over 300 TSBs around the UK where you can do your banking.
The account comes with a free Square reader with no fees to pay on your first £1,000 of sales.
Designed for businesses with an annual turnover less than £1 million, the M Account for Business has no monthly fee as well as free day-to-day online banking.
M Account for Business customers get cashback for their business whenever they use their debit card, will earn 0.25 per cent cashback with no cap. Currently there is an introductory offer of 0.35 per cent cashback until 31 January 2022 (capped at £500).
The M Account for Business comes with an optional 12-month overdraft called Planned Borrowing with a £1,000 borrowing limit. Planned Borrowing has an estimated annual interest rate (EAR) of 9 per cent (8.5 per cent per annum over the Bank of England base rate).
The Virgin Money Business Current Account is designed for businesses with turnover of up to £6.5 million. It offers 25 months of free day-to-day banking, after which the monthly charge is £6.50.
In addition to all the standard online banking tools for monitoring your account, you can earn 0.35 per cent cashback on direct debit transactions, discounts on business purchases, and more discounts when you use your debit card at selected merchants.
A cash limit (paid in, paid out or exchanged) of £250,000 per year applies.
Of course, a small handful of digital banking platforms have appeared in recent years. Here’s a quick breakdown of their headline features.
Best digital banking platforms 2022
|ANNA||Smart invoicing, automatically chase outstanding payments||Pay-as-you-go tariff means you just pay per transaction such as 20p per transaction moving money in or out: otherwise, its Business package is £14.90 per month + VAT, which bundles £35 worth of free activity and then adds charges per transaction|
|CardOneMoney||For companies with turnover of less than £2m. Text alerts confirming when money is in and to confirm that bills have been paid |
Check your balance using text messages
Up to four additional prepaid corporate MasterCards linked to your business account
Export statements to a cloud accounting network
|£12.50 a month plus a £55 application fee|
|Cashplus||Add up to 20 additional business expense cards for your employees to use|
Cashplus integrates with accounting software
Get a business cash advance to help with cash flow
iDraft (see description)
|Annual fee of £69|
|Countingup||2-in-1 business account and accounting app. Automated bookkeeping, professional invoices and automated receipt scanning as key features along with tax calculated and filed for you|
Add notes and attachments directly to your transactions
Receipt capture and tax estimate
|First three months free then: £3 a month if you deposit up to £750; £9 is you deposit £750-£750,000; £18 a month unlimited deposits|
|Mettle||Create and send invoices directly from your smartphone, complete with company logo|
Manage recurring payments in-app, add receipts to transactions and export your expense data
Can connect with Xero, Freeagent and Quickbooks
|Free to use and free to join|
|Monzo||Integrations with Xero, FreeAgent and QuickBooks; set aside a percentage of your earnings to put towards tax every time you're paid||Lite: Free
|Revolut||Hold, exchange and transfer currencies with real exchange rate, issue free corporate cards to employees, perks from commercial partners||Companies pay between £0 - £100 a month, depending on the account (or they can speak to Revolut and get a bespoke deal)
Freelancers pay ££0 for the free account, £7 a month for the Professional account and £25 a month for the Ultimate account
|Starling Bank||No monthly fees, categorised transactions, integration with Xero, FreeAgent and Quickbooks, overdraft facility||No monthly fee
Can add a monthly £7 'business toolkit' for extra functionality
|Tide||No fees on card payments in UK or abroad, Tide Mastercard, instant invoicing, integration with FreeAgent, Sage and Xero||Free (£0)
Plus Cashback (£49.99)
ANNA is open to any UK resident who is a director of a limited company and non-limited businesses that are structured as a partnership or sole trader.
It takes three minutes to set up and you’ll get a personal webpage with a link to put on your online profiles or send it to someone directly. You can also give your employees their own debit card with a spending limit and it’ll sort out their expenses automatically.
You can set up free direct debits as well as scheduled and recurring payments.
ANNA has two packages aimed at sole traders and small businesses: it’s pay-as-you-go tariff means you just pay per transaction such as 20p per transaction moving money in or out: otherwise, its Business package is £14.90 per month + VAT, which bundles £35 worth of free activity and then adds charges per transaction. See full prices here.
CardOneMoney (formerly CardOneBanking) is more old school. It uses text alerts to confirm when money is in your account and to confirm that bills have been paid. Use text messages to check your balance too.
The account is aimed at sole traders, limited companies or partnerships who have a turnover of up to £2m.
Add up to four additional prepaid corporate MasterCards which will link to your business account. You can also export statements to a cloud accounting network.
Just be aware that this one isn’t covered by the Financial Services Compensation Scheme either.
It’s £12.50 a month with a £55 application fee.
Cashplus says that it takes as little as four minutes to apply and only seconds to open an account.
It’s a good account if you already have a few members of staff on your payroll – add up to 20 additional business expense cards for your employees to use.
Get a business cash advance to help with cash flow and integrate it with online accounting software.
Cashplus gives you a specialist iDraft facility. iDraft is a low-cost credit limit that’s attached to your account in case you run out of cash. Use is covered by your annual fee but there is a flat daily usage charge too.
The annual fee for the account is £69.
Countingup is a relatively new player in the mobile banking market.
Its business offering comes with automated bookkeeping, professional invoices and automated receipt scanning as key features along with and tax calculated and filed for you. Add notes and attachments directly to your transactions or you can remind yourself to claim tax relief on the purchase.
This is a good choice if your business is UK-based as you can’t make or receive international payments with this account. Countingup hopes to include this feature in the future.
All accounting features appear in all of the accounts; these include receipt capture and tax estimate.
A three month free trial is offered, then its pricing structure is as follow:
- £3 a month if you deposit up to £750
- £9 a month if you deposit between £750 and £7,500
- £18 a month unlimited deposits
However, the self-employed can only keep up to £50,000 in their account, while limited company accounts are capped at £120,000.
Mettle is part of NatWest but is an independent arm. This means that you can’t ring NatWest and expect them to assist with your Mettle account.
You’ll be eligible if you’re a sole trader or a limited company with up to two owners, though you must have a balance of less than £100,000 (or £50,000 for sole traders) to apply.
One of the main highlights is that you can create and send invoices directly from your smartphone, complete with company logo. Notifications will let you know when you’ve been paid. However, you’ll need to match the payment to the outstanding invoice yourself.
Again, it goes half-way there in terms of chasing overdue invoices. It’ll remind you that an invoice is overdue, but you’ll have to send the client a follow-up yourself.
Transactions-wise, you can manage recurring payments in-app, add receipts to transactions and export your expense data.
Other than that, you can sync your account with FreeAgent, Xero or QuickBooks but you can also export to CSV which is compatible with other accounting software.
A key consideration you must make is that the app isn’t covered by the Financial Services Compensation Scheme (FSCS). However, the account is covered under the FCA safeguarding requirements and the corresponding regulations. The purpose of safeguarding is to protect and return customer money if the company fails.
Mettle is free to use and free to join.
Monzo is the latest of the digital banking platforms to introduce business banking. Open an account if you’re a sole trader or the director of a registered limited company by shares (Ltd). Multi-user access is available for limited companies. Just be aware that you need to have a personal account with Monzo before you can apply for a business account.
Accounts aren’t available to some types of businesses but this may be reviewed in future.
To limit financial crime, you can pay in £5-£300 of cash in one go, and up to £1,000 every six months.
As for features, Monzo integrates with Xero, FreeAgent and QuickBooks. With Monzo Business Pro, new Xero users can get six months of the cloud accounting platform free on the Business Pro account. It also has a Tax Pots feature, where you can set aside a percentage of your earnings to put towards tax every time you’re paid. What’s more, you can opt to be notified every time you get paid.
The pricing is on two tiers: Lite offers up the basics, but for additional features like integrated accounting and Tax Pots you’ll need to go Pro at £5 a month.
Revolut is a good shout for business owners who travel and trade overseas. Customers can hold, exchange and transfer over 28 currencies with the real exchange rate.
You can issue physical and virtual cards and track your employees spending in real time.
Revolut comes with perks and benefits from partners such as Apple, Google Ads, Deliveroo and Samsung.
In terms of accounts you’ve got:
- Free (£0 a month)
- Grow (£25 a month)
- Scale (£100 a month)
- Enterprise (bespoke – speak to Revolut)
Freelancers can choose from the free account (£0 a month), Professional (£7 a month) and Ultimate (£25 a month).
The Starling Bank business account is open to you if you’re a sole trader or the owner of a limited company, a limited liability partnership or if you’re part of a limited company with multiple owners.
There’s no monthly charge on the account and it comes with an overdraft. If you’re running a limited company, you can apply for an overdraft up to £150,000. To boost your business’ functionality, you can add on a Business Toolkit for £7 a month. Extra tools include invoices and auto-matching, email integrations and VAT recorded on transactions. The other add-ons are a euro business account (£2 a month) and a US dollar account (£5 a month).
If you want to deposit up to £20,000 cash, you can do so at Post Office branches across the country. It’ll set you back £3 per deposit.
What’s more, you can integrate your Starling Bank business account with Xero, FreeAgent and Quickbooks.
With Tide, you’ve got different account options.
The Free Tide account gives you the ability to schedule payments along with access to Quickbooks, Xero, Sage and more. The Plus account (£9.99 a month plus VAT) includes one free expense card for your team with up to 20 free transfers per month. The Cashback account (£49.99 a month) has all of the features of the Free and Plus accounts along with 0.5pc cashback on your Tide card and a dedicated account manager.
This article on small business banking has been brought to you in association with NerdWallet