The branch is no longer the default
Walk down any high street and the bank branches are thinner than they were five years ago. Most UK business owners now open their account from a phone or laptop, upload documents, and wait a few days for verification. Challengers such as Starling and Monzo hold full banking licences and sit inside the same compensation scheme as the old names, so eligible deposits are protected up to £85,000. Starling alone reports more than 450,000 business customers.
That shift changed what people compare. It is no longer about which manager you can meet, but what a monthly fee buys you, how cash gets in, and whether your accounting software talks to the account.
What you need before you apply
Almost every provider asks for the same set. You must be 18 or over. At least one person on the application has to be a UK resident. You will need addresses for the past three years, your business trading address, turnover and tax details, and a short description of what the business does. Limited companies add their Companies House number and incorporation date; sole traders add a Unique Taxpayer Reference.
One practical point: apply where your paperwork already lives. If you bank with a high street name personally, that relationship speeds up identity checks at that same bank. If your records are digital and tidy, a fintech onboarding team will usually move faster.
The real cost comparison
Monthly fees are the headline, not the whole bill. Cash deposits, foreign currency, and cheque handling are where the numbers move.
| Provider | Monthly cost | Fits best | Watch for |
|---|
| Starling Business Current Account | £0 | Sole traders and small limited companies wanting free UK payments | Cash-heavy businesses still pay per deposit at some Post Office counters |
| Monzo Business Lite / Pro | £0 / £5 | Owners who want pots for tax, 24/7 in-app support, simple invoicing | Pro tier needed for accounting integration and virtual cards |
| Tide Free / Cashback / Plus | £0 / £9.99 / £29.99 | Very small traders with light banking needs | 2% on cash paid in (minimum £1), £1 per ATM withdrawal, 2.5% plus £1.50 on international payments |
| Barclays Business Current Account | No monthly fee for 12 months, then £8.50 | Businesses wanting a branch network alongside an app | 60p per cash or cheque item after the introductory period |
| ANNA Money | Tiered, entry plan low-cost | Limited companies wanting invoicing, expense capture and tax pots in one place | Cash top-ups rely on PayPoint locations rather than branches |
| Wise Business / Airwallex / WorldFirst | £0 on entry plans | Sellers and importers holding several currencies | No UK overdraft; FX markup still applies, roughly 0.19% to 0.6% |
Read that table twice before choosing. A no-fee account that charges 2% on cash deposits can cost a market trader around £120 a year on £500 monthly takings, which is more than a paid plan elsewhere.
Where the monthly fee hides
Cash is the first trap. Cafés, hairdressers, market stalls and taxi drivers still take notes and coins, and online-only banks handle that through third parties. Every deposit carries a charge, and the rate rarely appears in the advertising. Check the cash-in rate before anything else if your till holds more than a few hundred pounds a week.
Foreign currency is the second. A freelancer paid in euros by a Dutch client may see a 2.5% markup on the conversion, while a multi-currency business account could cost a fraction of that. On £5,000 of overseas income a month, the gap is worth checking properly.
The third is timing. Some providers hold first payments for review while a new account beds in. A designer in Manchester who invoiced on the day the account opened, then waited six days for funds to clear, learned to keep a second account running for the first month. Parallel running costs nothing and protects your cash flow.
How to open one in an afternoon
Set aside two hours and work through it in order.
- Gather documents: photo ID, proof of address, Companies House certificate or UTR letter, and your last set of figures or a forecast if you are newly trading.
- Shortlist two providers, one with no monthly fee and one paid plan, so you can see what the extra money buys.
- Apply in the app. Expect questions on turnover, expected transaction volumes, and where your customers are based. Answer plainly; vague answers slow verification.
- Wait for approval, usually a few business days, then move a small test payment in and out before redirecting clients.
- Connect your accounting software. Starling, Monzo, Tide and ANNA all link to Xero, QuickBooks or FreeAgent, and that link saves hours at self-assessment time.
If you are leaving an existing bank, the Current Account Switch Service handles the transfer and redirects payments for a set period. Sole traders with a simple setup can usually run both accounts side by side for a month instead, which is gentler.
Which account suits which business
Sole traders with modest turnover
A no-monthly-fee account from Monzo or Tide covers most needs, and both offer pots for setting aside tax. Watch the per-transaction charges once you start paying in cash or receiving payments from abroad. The cheapest online business bank account is only cheapest at low volume.
Limited companies with staff
Directors need multi-user access, clear expense capture, and a clean audit trail. Starling and ANNA handle this well, and both let you issue separate cards with limits. Mixing personal and company money is the mistake that causes the most pain at year end, so open the account before the first invoice goes out, not after.
Anyone selling beyond the UK
Marketplace sellers and importers should look at Wise Business, Airwallex or WorldFirst for a GBP account with local sort code and account number, alongside balances in other currencies. These are payment accounts rather than full banks, so they suit collection and payout rather than borrowing. Keep a UK bank account for overheads and lending, and use the multi-currency one for trading.
A last nudge
Pick the account that matches your cash flow, not the one with the loudest advertising. If you handle notes and coins weekly, price the deposit rate first. If your customers sit overseas, price the conversion markup first. If you are a one-person consultancy paid in sterling, the no-fee option usually wins and the extra features can wait until you need them. Open two applications this week, compare the approval experience, and let the account that asks fewer awkward questions earn your business.
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