The UK business banking market has split in two
Branch networks keep shrinking, and app-first providers have become the default rather than the compromise. Starling alone reports more than 450,000 business customers, while Monzo, Tide, Revolut and Wise have built their offer around signing up from a phone in under an hour. High street names still hold most of the deposits, but their digital products have improved enough that the gap is now about services rather than screens.
Two pricing models sit side by side. One charges a monthly fee and bundles transactions; the other charges nothing per month and takes a slice of each activity. Starling's own comparison table puts effective annual account charges above £100 for several high street business accounts. Challenger accounts start at zero, then bill you per cash deposit, per ATM withdrawal or per foreign payment. Neither model is cheaper in the abstract. The question is which one is cheaper for your habits.
Cash still matters more than the marketing suggests. A market trader in a Yorkshire town, a café in north Wales, a mobile repair van in Norfolk: all of them take notes and coins that have to land in a bank. Some app-based accounts charge around 2% on cash deposits, with a minimum fee per transaction, and £1 or so per ATM withdrawal. If you bank £500 in cash a month, that is real money over a year, and it rarely appears in the headline comparison.
Then there is the currency question. A sole trader invoicing two German clients, or a small importer paying a supplier in dollars, feels every point of FX markup. A 2.5% margin on international payments quietly eats a chunk of margin on every job. Multi-currency accounts priced at the mid-market rate change that calculation, though they usually come with fewer of the protections a full UK current account offers.
The newest pressure is administrative. From 6 April 2026, sole traders and landlords with qualifying income above £50,000 must keep digital records and send quarterly updates to HMRC through compatible software. An account that cannot feed Xero, QuickBooks or FreeAgent, or that lacks its own filing tools, turns tax into a manual chore twice a quarter.
What each type of account actually costs
| Provider type | Example | Monthly cost | Best suited to | Watch out for |
|---|
| App-based bank | Starling Business | £0 account fee; accounting upgrade £7 per month until April 2027 | Sole traders and limited companies wanting one app for banking and tax | Cash deposits and some international transfers carry charges |
| App-based bank | Monzo Business Lite | No monthly account fee; Pro tier adds a small monthly charge | Small teams that want pots, tax set-asides and card controls | Fewer lending products than high street banks |
| Pay-as-you-go | Tide entry plan; paid tiers from £9.99 to £69.99 | £0 on the entry plan, charges per transaction | New businesses testing the water | FX markup and cash fees add up at volume |
| Multi-currency | Wise Business | No monthly subscription; a one-off fee applies to the Advanced plan | Exporters, freelancers billing overseas | Not a full UK current account replacement; protection differs |
| Cross-border specialist | OFX Standard and Full Suite | £0 on Standard; £75 per month on Full Suite | Businesses moving large sums regularly | No FSCS deposit protection; no invoice or tax tools |
| High street | Barclays, HSBC, Lloyds, NatWest | Several carry effective annual charges above £100 | Businesses needing cash handling, lending or in-person help | Slower onboarding; per-item fees |
Sole traders and freelancers
A Bristol web designer invoicing two EU clients is the classic case. A standard account converts each payment at a marked-up rate; a multi-currency account holds euros until the rate suits, then moves them across. The trade-off is that multi-currency providers are not banks in the traditional sense, so the account sits better alongside a conventional one than instead of it. For straightforward UK-only work, an app-based account with no monthly fee and unlimited Faster Payments is usually the simplest online business bank account for sole traders in the UK.
Limited companies with staff
Once you add directors, payroll and a bookkeeper, integration beats headline pricing. Starling, Monzo Pro and Tide's mid-tier plans all connect to accounting software, and Starling's own tool now handles Making Tax Digital submissions. A limited company in Manchester with three staff will feel the difference in month-end reconciliation, not in the account fee.
Businesses that handle cash and foreign currency
Cash-heavy trades should price their habits before they switch. Two per cent on deposits is tolerable for a business banking £200 a month and painful for one banking £3,000. Meanwhile, a Northern Ireland retailer buying stock in euros and selling in pounds needs both a sterling account and a currency route; splitting the two across providers is common and perfectly workable.
A checklist to run before you apply
- Confirm your eligibility. Most providers want UK residents as directors or sole traders, plus proof of identity and address. Limited companies usually need a Companies House number.
- Add up your real transaction mix. Count cash deposits, ATM withdrawals, international payments and bank transfers from the last three months. Then compare per-item pricing against a bundled monthly fee.
- Test the tax route. If your qualifying income crosses the £50,000 line, check that the account connects to compliant software before you commit.
- Check protection. Banks covered by the Financial Services Compensation Scheme protect deposits up to £85,000. Some app-based providers hold different permissions, so confirm the current position if you plan to hold large balances.
- Open with a small test. Run a low-value payment in and out, check the notification trail, then move direct debits across. Keep a second account open for a few months as a backstop.
Getting help locally
Free support exists and is easy to overlook. Growth Hubs in England, Business Gateway in Scotland, Business Wales and Invest NI all advise on banking and finance basics. HMRC's Making Tax Digital guidance spells out what software must do. Accredited accountants will often tell you which account their clients find least painful at year end, which is more useful than any comparison table.
The account you open today probably will not be the one you keep. That is fine. Start with the cheapest option that fits your current transaction mix, revisit it when your turnover or your customer base changes, and treat the switch itself as routine maintenance rather than a project. Open the app, check what the last month actually cost you, and adjust from there.
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