Compare bank accounts for sole traders UK 2022

Whether you’re a sole trader or have a side-hustle, it’s often recommended that you open a separate bank account to manage your finances. A number of UK providers offer bank accounts that have been designed for those who are sole traders.

Compare bank accounts for sole traders

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Name	Product	Account fee	Bank transfers	Interest (AER)	Accounting integrations	Arranged overdraft	Account management	Key benefits	Link
OFFER Mettle by Natwest Account Mettle by Natwest Account	OFFER	Free	Free	0% AER	FreeAgent, QuickBooks, Xero		App	Comes with a suite of free accounting software to integrate with (conditions apply)	Go to site View details		loading Fetching your data...
OFFER Start Up Business Account Start Up Business Account	OFFER	Free	£0.35	0% AER	FreeAgent		Branch, online, app & phone	Use the digital accounting tool FreeAgent to make invoicing, payroll and managing your cash flow easy. It’s worth more than £145 + VAT a year (based on annual fee as of Aug 2021), but free for you.	Go to site View details		loading Fetching your data...
EXCLUSIVE Tide Free Account Tide Free Account Finder Award	EXCLUSIVE	Free	£0.20 Free if both accounts are with Tide	0% AER	Clear Books, FreeAgent, KashFlow, QuickBooks, Reckon One, Sage, Xero		Online & app	FINDER EXCLUSIVE: Get 5 months free transfers when using the code FINDER5FREE. Plus register your limited company for free (usually £12) and open a Tide account in one go: choose 'Register a company' from the Tide homepage menu. T&Cs apply.	Go to site View details		loading Fetching your data...
FREE TRIAL The Co-operative Bank Business Current Account The Co-operative Bank Business Current Account	FREE TRIAL	£10 (waived in first 30 months)	Free	0% AER	QuickBooks, Sage, Xero, Multiple providers	On application (subject to status, eligibility and The Co-operative Bank's Lending policy)	Branch, online, app & phone	Free everyday business banking for first 30 months. Sole traders or Single Directors only. Apply online. Charges apply for cash and cheque transactions & other special services. Subject to status, eligibility and T&Cs.	Go to site View details		loading Fetching your data...
OFFER Cashplus Business Bank Account Cashplus Business Bank Account	OFFER	Free	£0.30 Free for first 3 payments sent each month (£0.30 for every transfer thereafter)	0% AER	Clear Books, FreeAgent, KashFlow, QuickBooks, Sage, Xero	By invitation	Online & app	No annual or monthly fee when you apply using the Finder link	Go to site View details		loading Fetching your data...
OFFER Juni Account - Made for ecommerce Juni Account - Made for ecommerce	OFFER	Free	Free	0% AER	Xero		Online	IBAN accounts in EUR, USD and GBP available. Plus up to 1% cashback on all eligible Juni card spend. Made for ecommerce companies.	Go to site View details		loading Fetching your data...
OFFER Business Account Business Account	OFFER	Free	£0.35	0% AER	FreeAgent		Branch, online, app & phone	Use the digital accounting tool FreeAgent to make invoicing, payroll and managing your cash flow easy. It’s worth more than £145 + VAT a year (based on annual fee as of Aug 2021), but free for you.	Go to site View details		loading Fetching your data...
OFFER Business Account - Standard Tariff Business Account - Standard Tariff	OFFER	Free	£0.35	0% AER	FreeAgent		Branch, online, app & phone	Use the digital accounting tool FreeAgent to make invoicing, payroll and managing your cash flow easy. It’s worth more than £145 + VAT a year (based on annual fee as of Aug 2021), but free for you.	Go to site View details		loading Fetching your data...
Countingup Starter Business Account Countingup Starter Business Account		£3 per month (waived in first 3 months)	£0.30	0% AER	N/A		Online & app		Go to site View details		loading Fetching your data...
OFFER Small Business Account Small Business Account	OFFER	£12.50 per month (waived in first 3 months)	From £0.30	0% AER	N/A		Online, app & phone	No monthly account fee for the first three months	Go to site View details		loading Fetching your data...
Multi-Currency Business Account Multi-Currency Business Account		Free	Free	0% AER	Xero		Online & app	Get a free multi-currency business account	Go to site View details		loading Fetching your data...
CASHBACK ANNA Free Account ANNA Free Account	CASHBACK	Free	Free 2 free UK transfers per month	0% AER	Sage, Xero		App	Earn 1% cashback for paying with your ANNA card in selected categories.	Go to site View details		loading Fetching your data...

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Latest reviews of business accounts for sole traders

HSBC - Kinetic Current Account

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• Why it’s great
• Pros/cons
• Details

No monthly account fees for 12 months, thereafter a monthly charge of £6.50 applies.

This everyday business bank account from HSBC can be applied for in a matter of minutes via the app, with most accounts being opened the same day. What's more, there's no monthly maintenance fee for the first 12 months and you'll also be able to apply for an overdraft of up to £30,000 in-app. The account enables users to manage direct debits and standing orders, freeze and unfreeze their debit card, analyse spending with automatically categorised transactions, and keep track of their finances with a monthly breakdown of cash flow. There's also the option to scan and deposit cheques in the app and make payments of up to £25,000 per day. Larger payments can be made via business telephone banking. Note that you cannot make international payments via the app and cheque books are not issued for this account.

• Easy to apply for and manage
• Arranged overdraft
• Useful app features to help you track spending
• No monthly fee for 12 months

• Interest is charged on overdraft
• Monthly maintenance fee applies after first 12 months
• No interest paid on credit balances

Account fee	£6.50 per month (waived in first 12 months)
Bank transfers	Free
Accounting integrations	QuickBooks Sage Xero
Requires credit check	Soft search with no impact on credit score
Overdraft

Mettle by NatWest - Mettle by Natwest

★★★★★

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• Why it’s great
• Pros/cons
• Details

Comes with a suite of free accounting software to integrate with (conditions apply).

One of the biggest draws of this business account from Mettle is that it's completely free to use. You can also apply in a matter of minutes from the app. Mettle is part of the NatWest Group and its account offers a range of features and benefits. These include assistance with invoicing, the option to set up Money Pots so that you can save for things like tax and new equipment, plus an overview of your cash flow at any time so you can keep track of your spending and income. You can also sync the account with accounting software such as FreeAgent, QuickBooks and Xero. To apply you must be a sole trader or limited company with up to two owners, and have a balance of less than £50,000 for sole traders, or £100,000 if not. You must also be a UK-based company and be a UK resident.

• Quick and easy application process
• Option to freeze your card if you loose it
• Free and includes some useful features
• Owned by the Natwest group whom are very credible
• Sleek easy to use app

• Overdrafts are unavailable
• Not FSCS protected
• Daily payment limit of £10,000

Account fee	Free
Bank transfers	Free
Accounting integrations	FreeAgent QuickBooks Xero
Requires credit check	Soft search with no impact on credit score
Overdraft

Starling Bank - Business Current Account

★★★★★

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• Why it’s great
• Pros/cons
• Details

Add the new Business Toolkit onto your free Starling account, and get the first month free of charge (RRP £7pcm).

If you're looking for a straightforward business bank account with no monthly fee and no UK payment charges, the Starling business account is worth a look. Applying via the app is easy and you'll also benefit from free 24/7 UK support via the app, phone or email. The account offers up to £85,000 protection under the Financial Services Compensation Scheme, as well as free ATM withdrawals and no fees abroad. Further benefits include integration with QuickBooks, FreeAgent and Xero, automated business spending categorisation, receipt capture, and international payments. Accounts can also be customised with add-ons, provided you're happy to pay a monthly fee. This includes the Business Toolkit which helps you create and send invoices, calculate tax, record your VAT and submit your VAT return, a Euro business account for exchanging and holding euros, and a US dollar business account for holding, sending and receiving US dollars.

• Add the new Business Toolkit onto your free Starling account and get the first month free of charge (RRP £7pcm)
• Completely free UK current account opened and ready to use in 20 minutes
• Safe and secure
• Fully licensed by the FCA and PRA
• Free to use your card abroad including ATM withdrawals, splitting the bill made easy with "settle up" feature, competitive and comprehensible overdraft fees
• Decent interest rate paid on current account balances
• Efficient app offering a range of good features such as budgeting tools and saving features
• Has a marketplace offering competitive pensions
• Mortgages and insurance from other growing fintech companies
• Teen account options
• 24/7 customer support (for all types of enquiries)

• Relatively new so does not offer every feature, e.g. mortgages
• No bank branches, all done via the web
• Only available to UK residents

Account fee	Free
Bank transfers	Free
Accounting integrations	FreeAgent QuickBooks Xero
Requires credit check	Soft search with no impact on credit score
Overdraft	Up to £50,000 subject to eligibility and application

Tide - Tide Free

★★★★★

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• Why it’s great
• Pros/cons
• Details

FINDER EXCLUSIVE: Get 5 months free transfers when using the code FINDER5FREE.

There are three different pricing plans with this business account from Tide, one of which is a free option. You can upgrade your account at any time as your business grows. All options allow you to sync your account with accounting software such as QuickBooks, Xero and Sage, as well as automatically categorise transactions, and send, pay and track invoices. Then, depending on the plan you have, you'll have a certain number of free transfers per month, be able to enjoy exclusive member perks and, with the most expensive plan, benefit from a dedicated account manager and cashback on your Tide card. Opening an account can take as little as 10 minutes and no credit checks are carried out. You should receive your Tide card within 2 to 4 working days. Cheques cannot currently be paid into the account.

• 24/7 customer support
• Categorised spending
• FCA regulated
• Quick set-up
• No monthly fees
• Easy to manage accounts and track payments within the app
• Ability to set up direct debits and standing orders
• Can receive online bank statements

• No branches - all done via the web
• Doesn't accept cheque deposits
• No personal accounts
• No international
• Transfers or interest offered

Account fee	Free
Bank transfers	£0.20 Free if both accounts are with Tide
Accounting integrations	Clear Books FreeAgent KashFlow QuickBooks Reckon One Sage Xero
Requires credit check
Overdraft

Cashplus - Cashplus Business Bank Account

★★★★★

Go to site Read review

• Why it’s great
• Pros/cons
• Details

No annual or monthly fee when you apply using the Finder link.

The Cashplus business account charges no monthly fee and no fees for UK purchase transactions. Signing up for the account can be completed in a matter of minutes and once your application is approved, your card will arrive in 3 to 5 working days. Once your account is up and running, you can deposit cash via bank transfer or the Post Office, use your card online and instore or to withdraw cash, pay bills and expenses online and categorise spending on the go via the app. You'll also be able to track expenses and block certain transactions, order up to 20 additional cards, download statements for each card in CSV format online, manage cards via a centralised management system, and integrate your account with accounting software. Funds are also protected up to £85,000 by the Financial Services Compensation Scheme.

• Have account up and running in 5 minutes
• Overdraft option "Cashplus iDraft" once you're eligible
• Currency cards to use overseas
• Online services in addition to the mobile app

• Charge to have your bank card issued
• Traditional bank still needed for majority of your business finance needs

Account fee	Free
Bank transfers	£0.30 Free for first 3 payments sent each month (£0.30 for every transfer thereafter)
Accounting integrations	Clear Books FreeAgent KashFlow QuickBooks Sage Xero
Requires credit check
Overdraft	By invitation

Can I use my personal bank account as a sole trader?

Unlike limited companies, there’s no legal requirement for a sole trader to open a business bank account.

However, legal aspects aside, most banking providers don’t allow personal current accounts to be used extensively for business purposes.

So, if you’re a sole trader, it shouldn’t be a problem to accept payments for the work you have carried out. But if a high volume of business-related payments is noted going in and out of your personal account, then your bank may contact you and ask you to set up a business account.

Should I get a business bank account as a sole trader?

If you’re going to be doing a huge amount of business banking, we’ve already established that even as a sole trader you probably won’t be allowed to use your personal current account for that.

But apart from that point, there are lots of other advantages that come with setting up a business bank account.

For one, it makes it a lot easier to keep your personal and business finances separate, especially when it comes to the end of the financial year and you need to work out your tax bill.

And then there’s the fact that some business accounts come with great features to help you manage your cash flow and bookkeeping.

Depending on which account you sign up for, you could benefit from an invoice creation service, expenses management, spending categorisation, budgeting tools and tax and VAT calculators. If you already use a different accounting software package, such as QuickBooks or Xero, these accounts can often integrate directly with those too.

And with a raft of new digital account providers on the market, you can usually manage all of this on the go through a slick mobile banking app.

How to set up a business bank account as a sole trader

Some banking providers have specific accounts designed for sole traders, while other banks will just let you use their standard business account. The application process varies by provider, but most can be completed online now.

In general, when you open a business account as a sole trader, you’ll be asked for proof of ID, proof of address and your contact details (plus your business name and address, if you have chosen to set these up as separate to your own). You might be asked for some details about your business, and a credit check may also be carried out.

How much do business bank accounts for sole traders cost?

This varies depending on which banking provider you go with, but unlike personal current accounts (which many of us are used to getting for free), it is far more common to be charged for using a business account.

Some business accounts come with a monthly fee, typically between £5 and £10, while others are free to set up and operate.

There will often be small charges for individual transactions, such as setting up direct debits, making or receiving payments or depositing cash into the account.

With some accounts, you get a certain number of transactions for free each month, or you may have the option of choosing a plan that reflects your payments mix. For example, if you know you’re going to be paying in a lot of cash, you could choose the plan with cheaper cash transactions charges as opposed to one with cheaper electronic payment charges.

Make sure you take all of this into consideration when you select your account, since tiny individual charges can run up to a big total if you’re carrying out a lot of transactions.

Also, remember to look out for any free introductory offers. Some banks will offer free everyday banking for the first few months or even the first year or two (although you will have to pay any business banking fees after that).

How to choose and compare a bank account for a sole trader

As with any financial product, the key to finding the best business bank account is to shop around and compare your options.

As part of your comparison, you’ll need to consider which features are the most important to you. For example, are you willing to pay a monthly fee or would you prefer a free account? Keep in mind that there may still be charges for certain transactions such as transfers and cash withdrawals.

You should also think about whether you might need an overdraft, whether you want your account to link to accounting software such as QuickBooks and Zero, whether you need invoicing support and whether you need to regularly bank overseas.

Don’t forget to also consider how you want to manage your account. Are you happy to bank solely online/via an app or would you like the option of being able to pop into a branch? When you’ve considered these options, you should find it easier to find the right account for you.

Using digital business accounts vs a traditional account

An increasing number of digital-only bank accounts have launched onto the market in recent years such as Tide, Revolut and ANNA Money, but how do they compare to traditional high street bank accounts and why should you choose one?

One of the biggest benefits of opening a digital business account is that the application process is quick and straightforward. In many cases, your account will be open the same day you applied. Some digital business accounts can even be opened without requiring a credit check, making them a good choice if you’re just starting out and have a limited credit history.

Many digital-only accounts also offer more innovative features compared to traditional bank accounts, whether that’s through linking to accounting software, offering budgeting tools, or including fee-free foreign transactions.

However, there are of course downsides. For a start, you’ll need to be happy managing your account online or via an app. Depending on the provider, you may also be able to manage your account via the phone, but there will be no bank branches to pop into if you need assistance.

Unlike high street banks, money held with digital business accounts won’t always be protected by the Financial Services Compensation Scheme (FSCS) either. This protects up to £85,000 per person, per financial institution. Instead, your money is likely to be protected by safeguarding requirements under the Electronic Money Regulations 2011.

Finally, keep in mind that because many digital-only business accounts do not carry out credit checks, they also will not offer overdrafts. In comparison, most high street bank business accounts will offer credit, including overdrafts and business credit cards. Again, you’ll need to weigh up what’s most important to you to help you decide.

Pros and cons of setting up a business account as a sole trader

The bottom line

It’s not a legal requirement for a sole trader to set up a business account for their banking needs (like it is for limited companies), and business accounts do often come with fees attached. But there are several advantages to opening one, including making the management of your business finances easier and being able to take advantage of any invoicing, cash flow and tax calculation tools that may come with it.

Frequently asked questions

• Can I deduct business bank account fees as a business expense for tax purposes?

  As a self-employed person you can usually claim bank charges as a business cost. The Gov.uk website has full details on self-employed expenses.

• Will I go through a credit check when I apply for a business account as a sole trader?

  It is possible that you’ll be credit checked when opening a business account as a sole trader.