The branch stopped being the default
Walk through any UK town centre and count the bank branches that have closed in the last few years. The shift is not just convenience. Most challenger providers now open a business account in an app, verify your identity digitally, and issue a card within days. Starling reports hundreds of thousands of business customers, Monzo built its business tier around sole traders and small limited companies, and Tide has made fast onboarding its main selling point.
The paperwork has not disappeared, though. Every UK provider still checks the same basics:
- Limited companies: Companies House number, SIC code, director details and people with significant control.
- Sole traders: HMRC registration and a UTR number.
- Everyone: photo ID, proof of address, and an honest estimate of expected turnover and transaction volumes.
Get those ready before you start an application and most rejections never happen. Apply with a rough guess on turnover and you will often be asked to reapply.
One more thing worth knowing early. Small companies usually sit inside the Financial Services Compensation Scheme, which protects deposits up to £85,000 per eligible claim. Larger firms often fall outside it. If your balance regularly runs into six figures, ask the provider directly rather than assuming.
What the main options look like
Fees are only half the story. The right account depends on whether you take cash, invoice in euros, or need your accountant to log in.
| Provider | Entry-level cost | Good fit for | What stands out | Watch for |
|---|
| Starling Business Current Account | No monthly fee | Freelancers and limited companies that want bookkeeping in the same app | Free UK payments in and out, built-in accounting tools, links to Xero, QuickBooks and FreeAgent, free multi-director access | Applications are reviewed case by case, so acceptance is not guaranteed |
| Monzo Business Lite | No monthly fee; the Pro tier carries a monthly charge | Sole traders who want instant notifications and money set aside for tax | 24/7 in-app support, Pots for ring-fencing, accounting connections on the paid tier | Some integrations and virtual cards sit behind the subscription |
| Tide Business Account (Free) | No monthly fee; paid plans and add-ons on top | New businesses that want to be running quickly | Same-day approvals are common, wide accounting software support | Per-transfer charges on the free plan and a monthly cap on free invoices |
| Revolut Business (Basic) | Free plan, though comparison data published by Starling puts the effective annual account fee around £120 | Businesses paid from overseas or holding several currencies | Multi-currency balances and cheap international transfers | The fee schedule rewards reading closely before you commit |
| High street banks (Barclays, HSBC, Lloyds and similar) | Around £100 to £120 effective annual fee in published comparisons | Firms that need lending, cash handling or a named contact | Credit facilities and relationship managers | Slower onboarding and more paper steps |
Three problems that come up again and again
The ID check that fails for no obvious reason
Most rejections trace back to a mismatch, not a bad business idea. Your name on the electoral roll differs from the name on your passport. Your address is two moves out of date. You registered with HMRC last week and the record has not updated yet.
A Coventry-based mobile barber hit exactly this. His driving licence showed an old flat, his HMRC letter showed the new one, and the automated check flagged the gap. He fixed it in an afternoon by uploading a recent council tax bill alongside his passport. Use the same document set across every application you make and the process gets quicker each time.
Cash still has to go somewhere
App-only banking works beautifully until you are holding £400 in notes on a Saturday evening. Market traders, barbers, cafés and repair shops feel this first.
Starling takes cash deposits at the Post Office for a 0.7% fee with a £3 minimum. Tide charges per withdrawal and applies percentage fees on cash deposits through some routes. Neither is unreasonable, but a business banking £2,000 a month in cash should run the numbers before choosing on app design alone.
Charges that appear on page two
The headline monthly fee is rarely the whole cost. Industry reviews of free business plans have reported foreign exchange markups ranging from roughly 0.5% to 2.75%, plus fixed charges on inbound and outbound transfers. Add ATM fees abroad and the picture changes.
Picture a Manchester design studio invoicing a Berlin client monthly. On a free plan with a 2.75% card markup, that is real money leaking out each quarter. Moving to a provider with a lower FX margin, or a paid tier that zeroes it out, often pays for itself well before the annual review.
Worth asking before you apply: what does a transfer in cost, what does a transfer out cost, what is the FX margin on card payments, and how many users can log in without paying extra?
A week to switch without losing a day
- Assemble the documents first. Companies House number or HMRC UTR, photo ID, proof of address, plus a realistic turnover figure and your main trading channels.
- Map where the money actually moves. Estimate the split between card payments, bank transfers, cash and foreign currency. That split decides your account, not the app store rating.
- Run the new account alongside the old one for a month. Keep direct debits and standing orders where they are until the new details have been tested with at least one client payment.
- Set up the boring parts on day one. Receipt capture, a tax Space or Pot, and view-only access for your accountant. Retrofitting this later means rebuilding a year of records.
- Check the real bill after 90 days. Add up fees actually paid rather than fees advertised. That number, not the marketing page, tells you whether to stay.
Local help is closer than you think. Growth Hubs across England offer free business advice, Business Wales and Scottish Enterprise run similar services, and HMRC's Making Tax Digital guidance explains what digital record-keeping now expects from you. Companies House filing deadlines are worth putting in the calendar the same week you open the account.
What to do next
Compare your last three months of transactions against the table above before you fill in any application. Most UK owners discover one cost they had not considered, usually cash handling or a foreign currency margin, and that single line often settles the decision.
Run one application this week with your documents already prepared. If you are a sole trader under a year old, start with a free tier from a provider that connects to your accounting software, then revisit after six months of real statements. The account you open today does not have to be the one you keep. It only has to be the one that stops you invoicing from a personal current account.
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