What "online" means in the UK market now
The choice splits into two camps. App-first providers such as Starling, Monzo, Tide, Mettle and ANNA run almost everything through a phone, with Post Office or PayPoint handling the cash side. High street names like NatWest, Lloyds, Barclays and HSBC still hold branches, lending teams and longer free-banking periods for switchers.
The distinction that matters most is what happens if a provider fails. Banks authorised by the regulators offer Financial Services Compensation Scheme protection on eligible deposits, up to the scheme limit (check the current figure before you rely on it). Several app-based providers operate as e-money institutions instead, which means client money is safeguarded in a separate account rather than covered by that scheme. If you sit on VAT reserves or payroll cash through the year, this is worth thirty minutes of reading before you sign up.
Identity checks have also tightened. Since Companies House introduced verification for directors and people with significant control, banks cross-check your details against the register. A mismatch in trading address or business name is the most common reason an application stalls for a week.
Where owners lose time and money
Cash handling is the first trap. A market trader in Leeds or a café in Cardiff still needs to bank notes, and percentage fees vary widely. Starling charges 0.7% with a £3 minimum at the Post Office, and caps sole trader deposits at £5,000 a day and £100,000 a year. Tide charges 0.5% at the Post Office but 3% at PayPoint, which stings if you are depositing takings weekly.
The second trap is mixing personal and business spending. It feels harmless until your accountant charges extra to unpick a year of fuel receipts, or a limited company loses the clean separation that protects directors from personal liability. A business bank account with accounting integration into Xero or FreeAgent pays for itself in saved bookkeeping hours, especially with Making Tax Digital reporting now running quarterly for larger sole traders.
The third is buying on the headline monthly fee alone. A "no monthly fee" account charging £0.20 for every transfer costs more than a £12.49 plan once you pass 60 outgoing payments a month. Do the arithmetic on your own statement from last year, not on the marketing page.
How the main options compare
| Provider | Monthly cost | Cash deposits | Suits | Worth knowing |
|---|
| Starling | £0, no UK payment charges | 0.7%, £3 minimum, at Post Office | Sole traders and small limited companies | Free built-in accounting tools; strong app |
| Tide | £0 basic, paid plans from £12.49 + VAT | 0.5% at Post Office, 3% at PayPoint | Firms needing invoicing and add-ons | £0.20 per transfer on basic plan, 2.75% FX on card spend |
| Mettle (NatWest) | £0 | Limited | Straightforward sole trader banking | Requires one transaction a month; no branch or Post Office counter service |
| Monzo Business | Lite £0, paid tiers monthly | Limited options | App-first limited companies | Invoicing and multi-user access sit on paid plans |
| ANNA Money | Pay-as-you-go £0, plans from £22.90 | Fees apply | Admin-heavy micro businesses | 60 free transfers monthly, then £0.20 each |
| Wise Business | No monthly subscription | Not supported | Receiving USD or EUR from clients | E-money provider, balances fall outside the deposit protection scheme |
| NatWest Start-up | £0, plus two years of free everyday transactions for switchers | Branch and Post Office | New businesses wanting a branch network | After the offer, around £0.35 per automated payment |
| HSBC, Lloyds, Barclays | Free periods for switchers, then tariff fees | Branch | Firms planning to borrow | Ask for the full tariff in writing before signing |
Matching the account to your setup
Take Sarah, who runs a two-person design studio in Bristol. She invoices roughly 120 clients a year, half of them overseas, and was paying a monthly fee for features she never used. Switching to a no-monthly-fee account with accounting software built in, plus a separate multi-currency business account for dollar invoices, brought her banking cost close to zero and removed the spreadsheet she used to keep for exchange rates. Her cash deposits, when a client pays in notes, still go through the Post Office at 0.7%.
A Manchester-based importer has a different problem. Payments land in euros and dollars, suppliers invoice in both, and card spending happens abroad. For that pattern, a multi-currency business account with transparent conversion pricing beats a high street current account with hidden FX margins every time. Compare the all-in cost of a €10,000 payment rather than the headline transfer fee.
Sole traders often do best with a free account from Mettle or Starling, though the Mettle requirement to transact monthly catches people who go quiet over winter. A limited company with two active directors needs multi-user access from day one. Tide and Starling both handle this, and NatWest adds a branch option and a two-year free-banking window for switchers with turnover under £2 million.
Anything approaching a loan, an overdraft or a commercial mortgage points back to a high street relationship. App-based providers are improving, but borrowing conversations still go better with a named contact and a branch you can visit.
Opening an account without losing a week
Get your documents lined up first: photo ID, proof of UK address, your Companies House registration or HMRC confirmation as a sole trader, and a clear one-line description of what the business does. Match the name and address exactly to the register, including punctuation and the flat number.
Apply through the app, expect a decision in minutes for simple sole trader cases and a few working days for limited companies with multiple directors. If you already bank elsewhere, use the Current Account Switch Service, which moves Direct Debits, standing orders and incoming payments within seven working days and comes with a guarantee covering any charges if it goes wrong. Set up the accounting feed before your first transaction, not after your first VAT return. Then test the cash route once with a small deposit so you know the fee and the limit before a busy Saturday.
Business Growth Hubs run free clinics across the regions, and Post Office branches publish deposit limits by account type. Both are quicker than a call centre queue.
Start with one question: how does money physically arrive in your business, and how often? Card and bank transfer only, and almost any app-based account works. Notes and coins every week, and the cash fee structure decides everything else.
研究の知恵