Where UK business banking stands right now
App-based providers have taken a large share of small business accounts, and the high street banks have responded by closing branches and pushing everyone into call centres. For a sole trader in Swansea or a design studio in Manchester, that shift is mostly good news: applications take minutes, and you get a debit card before your first client pays.
It also creates three problems that catch people out.
The first is eligibility. Some accounts are open to sole traders and limited companies, others quietly exclude incorporated businesses. Mettle, for example, only works where you are the sole director and sole shareholder. Read the small print before you spend an evening filling in forms.
The second is the fee structure. A free business bank account is rarely free once you pay in cash, send money abroad, or push through fifty transfers a month. Pay-as-you-go pricing is fine for a quiet month and painful in a busy one.
The third is tax admin. From 6 April 2026, sole traders and landlords with qualifying income above £50,000 must use Making Tax Digital for Income Tax, sending quarterly updates through compatible software. An account that feeds straight into Xero, QuickBooks or FreeAgent saves you a second subscription and a lot of manual entry.
The comparison that matters more than the headline rate
| Provider | Monthly cost | Best for | Cash and cheques | Deposit protection | Watch out for |
|---|
| Starling Business | £0 | Sole traders and limited companies wanting free day-to-day banking | Post Office cash deposits, mobile cheque deposit | FSCS protected up to £85,000 | Invoicing tools cost extra; no branches |
| Tide | £0 up to around £60 depending on tier | Business bank account with invoicing built in from day one | PayPoint and Post Office deposits, fee per deposit | E-money safeguarding, not FSCS | Per-transfer charges on entry tiers; FX markup on overseas payments |
| Monzo Business | £0 Lite, £5 Pro | Mobile-first owners who want instant notifications | PayPoint deposits, fee applies | FSCS protected | Lighter feature set for payroll and multi-user work |
| Mettle | £0 | Single-director limited companies and sole traders using FreeAgent | Limited cash handling | FSCS protected | International payments are thin |
| Wise Business | £0 to open, no subscription on the basic plan | Freelancers and agencies paid in euros or dollars | Not a full branch-style current account | Not FSCS protected | No overdraft; not a substitute for a full UK current account |
| Virgin Money | Tariff-dependent | Businesses still handling cash and cheques | Branch and in-app cheque support | FSCS protected | Check the tariff once any introductory period ends |
Prices shift, so treat the table as a map rather than a quote. The pattern is what matters: the cheapest headline is often the most expensive account for a cash-heavy or overseas-facing business.
Matching the account to how you earn
A sole trader with a handful of invoices. Priya, a freelance illustrator in Bristol, spent her first year on a personal account and had to unpick the bookkeeping later. She moved to a free sole trader bank account with inbuilt invoicing, and the real gain was not the monthly fee. It was that every invoice and payment landed in one place, which made her first Self Assessment return a single evening's work instead of a weekend.
A limited company with staff and receipts. Callum runs a two-van joinery firm in Leeds. He needs expense cards with individual limits, a bookkeeper's login, and cash deposits after a weekend of small jobs. A paid tier at around £10 to £20 a month made sense for him, because unlimited transfers and staff cards cost less than the per-item charges on a free plan. Limited company bank accounts with accountant access are worth paying for once you have payroll.
Anyone paid in another currency. A common mistake is assuming a UK current account gives you a fair exchange rate. Industry comparisons regularly put app-bank currency markups somewhere between 1% and 3%, which on a €10,000 invoice is real money. A multi-currency business account that shows the mid-market rate and the fee upfront is usually the cheaper route, even without FSCS cover, as long as you keep the bulk of your balance in a protected account.
Cash-heavy and rural businesses. A farm shop in Aberdeenshire still takes cheques from older customers and a few hundred pounds in notes each week. Cash deposit fees of around 1% to 2%, plus a minimum charge per deposit, quietly add up to more than a monthly subscription. Check the deposit routes near you before you commit.
A short checklist before you apply
- Confirm your legal structure. Sole trader, single-director company, or company with several shareholders each open different doors.
- Write down your three must-haves. Invoicing, MTD-compatible software, cash deposits, or multi-user access. Anything beyond three is a nice-to-have.
- Test the app before you switch. Most providers let you browse screenshots or open an account and close it inside a month.
- Check the protection position. FSCS cover protects eligible deposits up to £85,000 if a bank fails. E-money firms such as Tide safeguard your money differently, which is a legitimate model but a different promise.
- Keep a second account. A spare account with a different provider costs nothing and keeps you trading if one app has an outage on payday.
- Move payments properly. The Current Account Switch Service covers most business current accounts, but some app-based providers ask you to move direct debits yourself.
Useful free starting points: the FSCS checker to confirm protection, GOV.UK's Making Tax Digital guidance to check whether you are in scope, and the British Business Bank's finance hub for comparisons that are not affiliate-driven.
One practical next step
Pull out your last three bank statements and highlight every fee that was not a payment to a supplier. Transfers, cash deposits, card charges abroad, currency conversion. That total is your real benchmark, and it is the number any new online business bank account has to beat.
Then pick two providers from the table above, one with FSCS cover and one built for the way you get paid, and run them side by side for a month. Most people find the decision settles itself once the statements are in front of them, and the account they keep is rarely the one with the biggest advert.
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