What owners are weighing up
Most new businesses in the UK now open an account inside an app rather than on a high street. The eligibility bar is straightforward: you need to be a sole trader or a director of a UK limited company, with photo ID, proof of address, your Companies House number and, where relevant, a VAT number. The slow part is the comparison, because headline pricing hides the details that decide whether an account suits you: cash deposits, overseas transfers, card charges and what happens once an introductory period ends.
Fees cause the first headache. A no monthly fee business bank account is not the same as a free one. Some providers charge nothing per month but take a slice of cash paid in, or add a margin to foreign exchange. Others charge a flat subscription and include most day-to-day payments. Run your own numbers against last year's statement rather than the marketing page.
Cash still matters in a lot of UK trades. Market stalls, cafés, plumbers and farm suppliers handle notes and cheques long after most offices stopped. Starling charges 0.7% on Post Office deposits with a £3 minimum, while Monzo takes £1 per cash deposit at PayPoint and Post Office counters. Both are workable, but a shop banking £2,000 in notes each week will feel the difference far more than a consultant who never sees a tenner.
Then there is admin. Making Tax Digital for Income Tax now covers sole traders above the qualifying income threshold of £50,000, which means bank feeds into accounting software are no longer a nice extra. Monzo's free Lite plan files directly to HMRC and connects to Xero, QuickBooks and FreeAgent. Starling bundles bookkeeping and tax tools inside its app. If your accountant already runs one of those platforms, check the connection works before you commit.
International work is the fourth pressure point. Freelancers invoiced in euros, importers paying suppliers in dollars and exporters receiving funds from several countries all pay for currency conversion, often without seeing the margin. A multi-currency business account from Wise or OFX lets you hold and receive in several currencies with local account details, but check the small print: OFX states plainly that it does not offer FSCS deposit protection, so it works best as a payment layer rather than your only home for cash.
One more thing gets overlooked: borrowing. Overdrafts and loans are harder to obtain from app-only providers, particularly in the first year of trading. A high street bank with an introductory free period can still make sense if you expect to need a business loan or a commercial mortgage within two years.
Matching the account to how you trade
| Account type | Typical examples | Indicative cost | Good fit for | Watch out for |
|---|
| Free app-based current account | Monzo Business Lite, Starling | £0 monthly; cash deposits charged (£1 at Monzo, 0.7% min £3 at Starling) | Sole traders and small limited companies trading mostly by card and transfer | Little lending; cash handling costs add up |
| Paid app plan with tools | Monzo Pro £9/month; Monzo Team from £25/month | Fixed monthly subscription | Businesses wanting invoicing, tax pots, staff expense cards | Paying for features your accounting software already covers |
| International or multi-currency | Wise Business Essential, OFX Standard and Full Suite | Wise Essential £0; OFX Standard £0; OFX Full Suite £75/month for up to five users | Importers, exporters, agencies billed in euros or dollars | OFX offers no FSCS protection; not always a full UK current account |
| High street business account | Barclays, Lloyds, NatWest, HSBC | Free introductory period, then a monthly charge | Cash-heavy businesses and firms planning to borrow | Slower onboarding; pricing rises after the intro |
Deposit protection deserves a mention in its own right. The FSCS ceiling now sits at £120,000 per eligible depositor per bank, and most small limited companies fall inside the small-company criteria. Larger firms do not, which is one reason some finance directors spread balances across two providers.
Three situations that come up repeatedly
An electrician in Sheffield working alone, taking a mix of card and cash, rarely needs a subscription. A free account plus a separate pot for tax, funded by a standing order each Friday, keeps the admin light. The tax pot is the useful part, not the branding.
A design studio in Manchester with four staff and clients in Amsterdam and Berlin needs invoicing, expense cards with limits and decent FX pricing. Paying £25 a month for a team plan is often cheaper than paying per transfer on a free account, once currency margins are counted.
A retailer in Bristol with weekend footfall and two part-time staff usually lands on a high street account for the cash handling, or a paid app tier if the owner wants real-time spending controls on staff cards. Neither is wrong. The mistake is choosing on the sign-up offer alone.
Cheaper is not automatically better either. A £9 monthly fee that saves two hours of bookkeeping each month is a straightforward win, while a free account that costs 3% every time you take cash out can quietly cost more.
Opening one without friction
Start with documents. Photo ID, proof of address dated within the last three months, your company registration number, and details of expected turnover and transaction patterns. Mismatched addresses between Companies House and your ID are the most common reason an application stalls.
Read the excluded industries list before applying. Money services, some crypto-related activity and certain regulated sectors sit outside what app-based providers will accept, and finding out after you have printed everything wastes a week.
Keep both accounts running during a switch. The Current Account Switch Service is free and moves Direct Debits, standing orders and payees, redirecting payments made to the old account, but a parallel month gives you room to check that payroll and supplier payments have landed correctly.
Test the small stuff early: one cash deposit, one international payment, one card refund, one accounting sync. Problems are cheaper to fix in week one than at year end.
Set a review date six months out. Compare what you actually paid against the quote, then decide whether the plan still fits.
If you are still deciding, write down the three costs you cannot avoid: monthly fee, cash deposit charge, currency margin. Rank the accounts on those three numbers alone, then look at apps and integrations. Most owners find the choice narrows to two providers within an afternoon, and the account you can open today with clean records beats the perfect one that needs another three weeks of paperwork.
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