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.
|Bank||Eligibility||Free banking period||Account fee thereafter||Cash transaction limit|
|HSBC||Businesses with up to £10 million turnover||18 months||£6.50 a month for 12 months; £6.50 a month thereafter||Up to £3,000 cash per month. 0.50 per cent per £100 exceeding that limit|
|Santander||Trading for less than 12 months and business is opening first business account with Santander||18 months||£7.50 a month||£1,000 per month with 70p per £100 exceeding the limit|
|TSB||Open to sole traders, partners and directors||6 months||£5 (waived if your average balance in the month is £10,000 or more)||N/A|
|RBS / Natwest||Over 18s who have a right to be self-employed in the UK||18 months||Cost per transaction on Standard Tariff (see below)||N/A|
|Lloyds / Bank of Scotland||New businesses who have a turnover of up to £3 million for the Business Current Account for New Businesses||18 months||£7 a month||N/A|
|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||£6 a month (Mixed Payments Plan) £6.50 a month (e-Payments Plan)||N/A|
|Virgin Money (formerly served by Yorkshire Bank and Clydesdale Bank)||Businesses must have a turnover of under £6.5 million and/or have opened their account within 12 months of starting|
Business Choice Account open to those with over £6.5 million turnover
|25 months (none for Business Choice Account)||£6.50 a month (Business Banking Tariff)||£250,000 per year|
|Metro Bank||Businesses must have a turnover under £2 million||N/A||£0 on account balances over £5,000 and £5 a month for balances under £5,000 (see below)||N/A|
If you start your business with HSBC, you’ll bag free banking (that means no maintenance fee or payments into an account covered by standard account charges) for the first 18 months.
The account is now available for businesses with a turnover of up to £10m. After the first 18 months, the maintenance fee is £6.50 a month for 12 months. Then it will convert to the chosen tariff. Within the business current accounts, you’ve got a choice between the electronic banking tariff or the small business tariff depending on how you do your business banking.
A Visa Commercial Card is available with this account which has a £32 annual fee.
You can deposit up to £3,000 a month at this point and then 0.50pc of the value of cash paid in over this limit.
To compete with the digital banking platforms, HSBC has launched the Kinetic Current Account which is a mobile-first banking service operated through an app. Like the other business current account, there are no fees for the first 18 months.
You can monitor you cash flow and get spending insights as well as arrange in-app overdrafts. However, you can’t make international payments. The account doesn’t come with a credit card or cheque book either. If you need those features, stick with the Start-up Business Bank Account.
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 1pc, 2pc or 3pc. This cashback will be paid on the first £10,000 deposited into your account per year.
That’s 1pc on turnover of less than £200,000 – you’ll get up to £100 of cashback per year; 2pc on turnover of £200,000+ – (£200 cashback per annum); 3pc 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.
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.
The 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 mixed payment plan which is great for businesses that use cash, cheques or mixed methods to make and receive payments – this plan has a £6 monthly fee. There’s also e-payment for those that receive electronic payments and make payments through online banking and debit cards. The e-payment plan has a £6.50 monthly fee.
Natwest / RBS
There’s a choice between two traditional bank accounts with NatWest: Startup and Business. They’re open to those over 18 who have a right to be self-employed in the UK.
More specifically, the Startup account is open to businesses that have been trading for less than a year and have a turnover of less than £1 million. It has free banking for 18 months, moving onto the Standard Published Tariff.
The Business Account is available to those who have been trading for over a year. If your turnover is over £2m you’ll get your own Relationship Manager.
Like HSBC, Natwest has launched a mobile-first banking app, Mettle. 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.
RBS offers fee-free banking for the first 24 months on its Startup account, which is also open to those who have been trading for less than a year with a turnover of less than £1m. After the first 24 months is up, you’ll be moved on to the Standard Tariff.
There’s no minimum monthly charge on the Business account, so you only pay for what you use. These accounts are open to businesses that are over a year old.
Transaction fees with both banks are 35p for automated payments, 70p per £100 in cash payments and 70p per item on manual payments.
Lloyds / Bank of Scotland
With Lloyds and Bank of Scotland, new businesses with a turnover of less than £3 million get 12 months of day-to-day banking for free with the Business Current Account for New Businesses whether you’re switching or opening a new account. It has free electronic payments and simple pricing structures. The monthly fee will be £7 once the free banking period ends. Just be aware that they’re not accepting switching customers at the moment.
There are also options for larger businesses (those with a turnover of more than £3 million).
You can get extra support from products like business loans, insurance and overdrafts.
Halifax doesn’t have a business bank account offering at this time.
Virgin Money (formerly offered by Yorkshire Bank and Clydesdale Bank)
Clydesdale Bank and Yorkshire Bank have joined up with Virgin Money to offer a single set of business current account.
The Business Current Account offers 25 months’ worth of free day-to-day banking for new customers. Businesses with a turnover of under £6.5 million are eligible, as are start-ups who are opening an account within 12 months of starting to trade. At the end of the free period, you’ll move on to the business banking tariff.
The Business Choice Account is an all-round account open to businesses with an annual turnover of more than £6.5 million. There’s no free banking period but the account comes with access to the latest digital tools and a team of experts.
From May 1 2021, business owners on both accounts who use their debit cards will automatically earn cashback of 0.35 per cent of their spend on goods and services. That gives you the potential to earn up to £500 per calendar year per debit card.
As well as bank accounts for larger businesses, Metro Bank has a specialist account for start-ups and SMEs who have a turnover under £2 million.
If your balance stays above £5,000 for the whole month, Metro Bank will waive your monthly account maintenance fee. Otherwise it’s £5 for that month. If you stay over £5,000 you get 50 fee-free UK transactions for a month with 30p per transaction in excess of that. Accounts that go below £5,000 will pay 30p per UK transaction.
Of course, a small handful of digital banking platforms have appeared in recent years. Here’s a quick breakdown of their headline features.
|ANNA||Personal webpage, set up free direct debits, give employees own debit card with spending limit||Free if your monthly income is under £500
£4.90 a month if your monthly income is £500-£2,000
£9.90 a month if your monthly income is £2,000-£20,000
£19.90 a month if your monthly income is £20,000-£500,000
|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, add-ons available, integration with Xero, FreeAgent and Quickbooks, overdraft facility||No monthly fee
Can add a monthly £7 'business toolkit', £2 euro business account and/or a £5 US dollar account for extra functionality
|Tide||No fees on card payments in UK or abroad, Tide Mastercard, integration with FreeAgent, Sage and Xero||Free (£0)
Plus Cashback (£49.99)
|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
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 is free if your monthly income is under £500; £4.90 a month if it’s £500-£2,000; £9.90 a month if it’s £2,000-£20,000 and £19.90 a month if it’s £20,000-£500,000.
Revolut is a good shout for businesses 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 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) 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.
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.
This article on small business banking has been brought to you in association with NerdWallet.