How to Get a Business Bank Account in the UK

Choosing the right business bank account is one of the most practical decisions you will make when starting or running a UK business. The account you pick affects your day-to-day cash flow, your ability to accept card payments, international transfers, and how efficiently your accountant can reconcile your books.

1. Why You Need a Separate Account

For limited companies, maintaining a separate business bank account is a legal necessity. A limited company is a distinct legal entity from its directors and shareholders, and company money must never be commingled with personal funds. Mixing finances is a warning sign for HMRC and can undermine the limited liability protection the structure provides — courts have occasionally disregarded the corporate veil where company and personal finances were treated as one.

For sole traders and partnerships, there is no strict legal requirement for a dedicated business account, but the practical arguments are compelling:

• HMRC clarity — a clean bank statement makes it far easier to identify allowable expenses during Self Assessment and to respond to any HMRC enquiry
• Professional image — clients and suppliers pay into an account trading under your business name rather than your personal name
• Legal separation — separating personal and business liability, even informally, helps demonstrate that debts incurred in the business are business debts
• Accounting efficiency — bank feeds into accounting software (Xero, QuickBooks, FreeAgent) work most cleanly with a dedicated account

Many personal current account terms and conditions prohibit using the account for business purposes — your bank can close the account without notice if they discover you are running a business through it.

2. Types of Accounts

Not all business accounts serve the same purpose. Understanding the types available helps you choose the right combination:

• Business current account — the core day-to-day account for receiving income, paying suppliers, and running direct debits and standing orders. Most businesses need at least one.
• Business savings / deposit account — for holding reserves, VAT funds, or tax provisions. Interest rates are typically better than current accounts but access may be restricted. Some accounts require notice periods of 30–95 days for withdrawals.
• Multi-currency account — hold, send, and receive money in multiple currencies. Useful for importers, exporters, and businesses with international clients. Providers include Wise Business, Airwallex, and Revolut Business.
• Merchant account — required to accept debit and credit card payments in person or online. Typically involves a payment processor or acquirer agreement. Not the same as a business current account.
• Startup account — some banks offer fee-free accounts specifically for newly incorporated businesses, usually for 12–24 months, to attract early-stage companies.

3. High Street Banks

The four major high street banks — Barclays, HSBC, Lloyds, and NatWest — remain popular for business banking, particularly for businesses that value branch access, overdraft facilities, or relationship managers for larger accounts.

Typical features and costs:

• Monthly fees: £5–£10 per month for standard accounts; some waived in year one
• Free banking periods: 18–24 months of free business banking for startups and newly incorporated companies is standard across all four majors
• Transaction charges: typically 25–35p per electronic payment; 50p–£1 per cash deposit after a free allowance
• Overdraft facilities: more readily available than with challenger banks; arranged overdrafts from £500 to £50,000+ depending on creditworthiness

Documents typically required to open a high street business account include: Companies House registration number (for limited companies), proof of identity (passport or full driving licence) for all directors with significant control, proof of business address (utility bill or bank statement dated within 3 months), business plan or summary (sometimes requested), and estimated annual turnover.

4. Digital and Challenger Banks

Digital-first business banks have taken significant market share by offering fast onboarding, lower fees, and excellent mobile apps:

• Starling Bank — a licensed bank (FSCS-protected); free business current account; accounting integrations; overdraft available; highly rated for SMEs
• Monzo Business — free tier and Pro tier (£9/month); FCA-authorised bank; popular with sole traders and small limited companies; good expense management
• Tide — an e-money institution, not a bank (no FSCS protection); zero-fee plan and paid tiers; strong invoicing features; widely used by freelancers
• Revolut Business — e-money institution; strong multi-currency capabilities; free and paid tiers; good for businesses transacting in multiple currencies
• Cashplus — targets credit-impaired businesses; no credit check; monthly fee; prepaid card model

Pros of challengers: fast setup (often 1–3 days), competitive fee structures (free tiers available), excellent mobile UX, instant notifications, and strong accounting software integrations.

Cons: limited or no branch access, lending facilities are more restricted than high street banks, and e-money institutions are not FSCS-protected (your deposits are safeguarded in segregated accounts but are not government-guaranteed up to £85,000).

5. What You Will Need to Open an Account

Requirements vary by bank and business structure, but you should have the following ready:

• Companies House registration number (for limited companies and LLPs)
• Proof of identity — passport or photo driving licence for each director, significant controller, or beneficial owner with 25%+ of shares or voting rights
• Proof of address — utility bill, bank statement, or council tax bill dated within 3 months for each director/owner
• Business address — your registered office address (must match Companies House records)
• Estimated annual turnover — required for AML risk assessment purposes; approximate figures acceptable for startups
• Nature of business — SIC code, description of what you do, and who your customers are
• Source of funds — banks may ask where your startup capital comes from; personal savings, loan, or investment are all acceptable if evidenced

All UK banks are required to conduct Anti-Money Laundering (AML) and Know Your Customer (KYC) checks under the Money Laundering Regulations 2017. Providing clear, accurate documentation speeds up the process.

6. Sole Trader Accounts

Sole traders have more flexibility than limited companies when it comes to business banking. While not legally mandated, a dedicated account is strongly advisable. Many banks offer simplified sole trader accounts with lighter documentation requirements:

• Proof of identity and address for the sole trader
• UTR (Unique Taxpayer Reference) number, if available
• Description of the business and expected turnover

Sole trader accounts from challengers like Starling and Monzo Business are available on free tiers and are popular with freelancers and tradespeople who want straightforward financial management. Some sole traders use a secondary personal account branded as their business account — this is generally acceptable if the bank permits business use, but a dedicated account is cleaner for accounting purposes.

7. Multi-Currency Accounts

If your business imports goods, exports to international clients, or pays overseas suppliers, a multi-currency account reduces costly currency conversion fees. Key providers:

• Wise Business — holds 40+ currencies; local account details in EUR, USD, GBP, AUD and more; mid-market exchange rate with a low transparent fee (typically 0.4–0.6%)
• Airwallex — strong for e-commerce and SaaS businesses; global collection accounts; payouts in 120+ countries
• Revolut Business — multi-currency wallets; currency exchange at interbank rate (within fair usage limits on paid plans)

When do you need one? If you are regularly converting more than £1,000 per month between currencies, or receiving payments denominated in foreign currency, a multi-currency account will typically save more in fees than it costs in monthly charges.

8. Merchant Accounts

A merchant account allows you to accept debit and credit card payments. It is separate from your business current account — though some providers bundle both. Options include:

• Stripe — online-focused; 1.5% + 20p per UK card transaction; no monthly fee; excellent developer API; widely used for e-commerce and SaaS
• Square — card-present focused; 1.75% per chip and contactless transaction; free card reader; good for retail and hospitality
• SumUp — flat 1.69% per transaction; low-cost card readers from £39; popular with tradespeople and market traders
• Traditional merchant acquirers (Worldpay, Barclaycard, Lloyds Cardnet) — interchange-plus pricing; monthly fees; better value above £20k/month turnover; required for some EPOS systems

MDR rates (Merchant Discount Rate) typically range from 0.5% for domestic debit to 3%+ for premium international credit cards. For most small businesses processing under £10,000/month, flat-rate providers are the most cost-effective option.

9. Overdraft and Credit Facilities

Business overdrafts differ from personal overdrafts in important ways. They are typically unsecured revolving credit facilities reviewed annually, and interest is charged only on the amount drawn. Business overdraft rates are typically base rate + 2–6% (so currently 7–10% p.a. following the Bank of England rate cycle).

Other credit options available through business banks:

• Invoice finance (factoring / invoice discounting) — advance 70–90% of invoice value immediately; useful for businesses with long payment terms
• Trade credit — negotiate 30–60-day payment terms with suppliers; a form of short-term financing
• Business credit cards — useful for managing expenses and earning rewards; avoid using as a long-term financing tool (APRs of 20–30%)

Business credit facilities are assessed separately from personal credit and are based on the business's trading history, turnover, and profitability. Newly incorporated companies with no trading history may need director personal guarantees.

10. Switching Banks

Switching your business bank account is straightforward under the Current Account Switch Service (CASS). The service is free and available to most UK business accounts:

• The switch is guaranteed to complete within 7 working days
• All direct debits and standing orders are automatically transferred
• Incoming payments sent to your old account are automatically redirected for at least 3 years
• If anything goes wrong, the switch guarantee ensures you are compensated for any charges incurred

Before switching, download 6–12 months of statements from your old account, update your sort code and account number with key clients and suppliers, and inform your accountant. New account promotions (cashback, free periods) are common — it is worth comparing offers before committing.

Key comparison at a glance