Opening a business bank account in the UK: How-to and best accounts

In this piece, we'll look at how to go about opening a business account in the UK and what services are out there.

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1. What type of business bank account are you interested in?

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Choosing the right kind of banking service is a major opportunity to get your business basics right from the beginning. While it may be inconvenient to maintain a separate account for both your personal and business activities, it is good practice to do so to keep your accounts clean. Here, we’ll look at how to go about opening a business bank account in the UK and what options are out there.

The pros of having a business account

Having a business bank account is a good idea for most businesses; even freelancers and one-man-bands.

As a sole trader, you may want to open a business bank account for a few reasons. Firstly, your bank may specify that a personal account is for personal use only and threaten to close your account if they see a large number of business-related transactions.

Secondly, if your personal costs are mixed up with your business costs, it could be difficult for you to inform HMRC about how much money your business has made. Finally, having a dedicated bank account is likely to make your business appear more professional to clients and partners.

It’s important to be aware of the process to open an account, otherwise you could waste a lot of time choosing the wrong one for your needs.

Opening a UK business account with a foreign entity

If your business has an overseas corporate identity, it’s possible that your home bank may be able to set up an account for you if it has a correspondent banking relationship with a British bank. Many major UK banks also have so-called ‘international’ accounts.

These are designed specifically for non-residents, so they’re a great option if you don’t have the documents to prove your UK address. In fact, you can even apply for an international account online. Barclays, Lloyds, HSBC, Santander and NatWest all offer international bank accounts.

However, opening a bank account from abroad or an international account may not be the right choice for you. You may have to make a big initial deposit and commit to paying in a minimum amount of money each month.

Some banks will also charge you a monthly fee in addition to these requirements. This can make your bank account expensive to open and run. There may also be other restrictions. For instance, you may not be able to close the account and switch to a better deal until a set period of time expires.

What documents and details do I need to provide to open a business bank account?

For businesses setting up a bank account in the UK, the process is relatively straightforward as long as you comply with the eligibility criteria. Make sure you have the following documents to hand when you open your account:

  • Proof of ID. All named company directors will need this. You can use a passport, national ID card or photo driving license.
  • Proof of address. This can be a utility bill or recent bank statement. Alternatively, use a council tax statement.

The following details of your company may also need to be given:

  • Full business address (including postcode)
  • Contact details
  • Companies House registration number (for limited companies and partnerships)
  • Estimated annual turnover
  • In some cases, you’ll need to prove your own personal financial situation, with documents to show you have a clean credit and banking history.

How to open a business account in the UK

The steps involved in opening a business account can vary between banks.

It’s advisable to start by researching the options online. Whether you can make your application online depends on the bank.  

You should tell the bank if you have foreign shareholders and/or directors of your business and that you need a UK business bank account (rather than an international business bank account that’s held offshore).

When the bank account is open, you are free to use your local bank branch for your banking needs on a day-to-day basis.

For more information on opening a business account in the UK from abroad you can contact the government’s Invest in Great Britain & Northern Ireland hub.

Best business bank accounts in the UK

There are a variety of retail bank accounts available in the UK, including the high street banks: Barclays, HSBC, NatWest/RBS, Santander, Metro Bank, TSB and Lloyds/Bank of Scotland. But it’s worth being aware that the best business account for your needs may not always be one of the high street banks. When you look at business account comparisons it may also be worth considering newer-established ‘challenger’ banks such as Metro Bank or Starling Bank. Here are the key benefits of each banking option:

Barclays

  • App with free invoicing feature
  • Business account free for first year and comes with a choice of financing options
  • Offers a start-up business account with free business banking for the first 12 months, and an established business account with two simple price plans

HSBC

  • Active in 64 countries
  • If you bank with HSBC in your home country, they can help you set up an account in the UK before you get here
  • Range of business bank accounts available
  • Businesses with a turnover up to £2m receive an annual review to ensure the best standard tariff for their business

Lloyds/Bank of Scotland

  • 12 months’ free day-to-day business banking
  • Two business accounts with range of tools, including management advice and accounting software

NatWest/RBS

RBS and NatWest’s offerings largely mirror one another. 

  • No minimum monthly fee
  • Multiple business accounts to choose from, depending on the size of your business
  • Online accounting software from FreeAgent

Santander

  • Earn up to £300 cashback per year
  • Discounted monthly fee of £5 for start-ups for the first 18 months

Metro Bank

  • A business bank account for smaller businesses as well as larger ones
  • No monthly fee if you keep your bank balance at £5,000 or more (£6,000 from September 2021)
  • Get access to a local business manager when you open your account

TSB

  • Free business banking for 25 months
  • Free Square card reader
  • Free access to digital advice from Enterprise Nation

Virgin Money

  • Free day-to-day banking for 25 months
  • No monthly account fee
  • Earn cashback on your debit card purchases

Monzo

  • Fully regulated
  • Accounting tool integrations
  • In-app invoicing and digital receipts

Starling Bank

  • Fully regulated
  • No monthly fees or UK payment charges
  • Free 24/7 UK customer support via app

Revolut

  • Holds money in 28 currencies
  • Convert at real exchange rate
  • Create unlimited accounts

Tide

  • Order up to 35 company expense cards
  • Three account plans based on your company’s needs
  • Send, pay and track invoices

For more a more detailed round-up, read What are the best business bank accounts in the UK?

Business banking monthly fees

It is typical for there to be monthly fees charged for business bank accounts and users should be aware of this before they open an account. Most UK business bank accounts come with an introductory offer such as free banking for 12 or 18 months. While these are tempting, always make sure you know how much you will end up paying once the introductory period is over.

As a general rule, the more transactions you make on the account, the higher the charges are likely to be.

Some business current accounts require a regular monthly or quarterly standing charge. This will typically cost you around £15 to £20 per quarter, but a there are plenty of accounts that don’t charge this fee at all.

How long does it take to open a business bank account in the UK?

It can take anything from a matter of minutes to a matter of weeks for a bank account application in the UK to be approved and possible meetings to be arranged, so make sure you factor this time into your business planning process.

With some operators, for example Metro Bank, it is possible to walk into a branch and make an appointment that day. Digital banks promise a quick application process as the process is all done online. 

Business bank accounts for non UK residents

There are increasing number of foreigners wanting to open or are opening companies in the UK, where they may also want to have a corresponding UK bank account.

Non UK residents who don’t have the necessary ID documents can still succeed in opening an account, as in recent years banks have shown greater flexibility when it comes to the documents they will accept as proof of address.

Opening a business account as a non UK resident

It is not necessary to live in the UK to open a UK business bank account, although it’s advisable to acquire UK residency before applying for one, as some banks will not entertain an application unless they have UK residency.

To open a UK business bank account, you will need two documents, one to prove your identity (usually your passport or National Identity Card) and one to prove your address, which applies to both in branch and online. 

It’s usually easier to open a bank account with one of the UK’s largest banks i.e. Barclays, Lloyds, HSBC. This is because they have lots of experience dealing with non-residents, so they can be flexible with their requirements.

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