Where UK business banking actually stands
Most new companies in the UK no longer walk into a branch. They sign up on a phone, upload a passport photo, and wait a day or two for a sort code. That shift has been driven by app-based providers, and it has changed what owners expect from a current account.
The old assumptions still trip people up, though. A limited company cannot run its business through a personal account, and directors who try it quickly find that HMRC and Companies House paperwork gets messy. High street banks that once bundled everything into a free-if-in-credit arrangement now charge monthly fees for the same basic service. Meanwhile the app banks compete on price and speed, not on lending relationships.
Three frustrations come up again and again in owner forums and review sites. The first is the mismatch between headline pricing and real costs. A "free" account that charges 20p per transfer, or 1% on every cash deposit, is not free for a busy shop. The second is the cash question. Florists, cafés, market traders and anyone taking notes and coins across a counter will pay to bank their takings, and the fees vary far more than most comparison pages admit. The third is a misunderstanding of protection. Several popular providers hold e-money licences rather than full banking licences, which means deposits are safeguarded rather than covered by the Financial Services Compensation Scheme. Both are legitimate, but they are not the same promise.
Running a company also brings eligibility rules into play. Since most applications are now completed online, the entire process rests on matching your details to public records. A sole trader in Cardiff needs photo ID and proof of address. A director of a limited company needs the company number, the registered address exactly as it appears on the Companies House register, and the details of anyone holding 25% or more of the shares. Mismatched addresses are the single most common reason an application stalls.
Comparing the main options
Prices below reflect published tariffs from providers and recent independent comparisons. Always confirm on the provider's own fee page before you apply, because plan structures change.
| Provider | Monthly fee | Best suited to | UK transfers | Cash deposits | Deposit protection | Main drawback |
|---|
| Starling Business | £0 (Business Toolkit £7 optional) | Most sole traders and small limited companies | Free and unlimited | £2 per deposit at Post Office | FSCS, up to £85,000 | Invoicing and accounting tools cost extra |
| Monzo Business | Lite £0, Pro £5 | Owners who want pots and instant notifications | Free | £1 at PayPoints and Post Offices | FSCS, up to £85,000 | Cash limits are tighter than high street banks |
| Mettle (NatWest) | £0, Mettle+ £4 | Freelancers and micro businesses wanting a bank behind the app | Free | Small fee per deposit | FSCS, up to £85,000 | Fewer international features |
| Tide | Free tier, paid plans from around £10 | Sole traders who invoice regularly | 20p per transfer on the free tier | Percentage fee, minimum charge | E-money, safeguarded | Costs rise quickly with volume |
| Barclays Business | £8 after an introductory period | Businesses that need branches and lending | Free electronic | 40p per £100 deposited | FSCS, up to £85,000 | Monthly fee and higher international charges |
| Revolut Business | From around £10, higher tiers to £79 | Importers, exporters and multi-currency traders | Allowance then per-item fee | Not supported | E-money, safeguarded | No cash deposits and no FSCS cover |
Reading the table by price alone will mislead you. Read it by behaviour instead.
Three owners, three very different answers
Priya illustrates design work from a spare room in Manchester. She sends maybe eight invoices a month, all paid by bank transfer, and she never handles cash. A free business bank account with unlimited UK transfers suits her exactly. She pays nothing monthly and adds the £7 toolkit only when self-assessment season arrives, because it exports straight into her accounting software. Her previous high street account charged her £6.50 a month for the privilege of doing less.
Tom roasts coffee in Leeds and takes cash at two weekend markets. His monthly takings in notes and coins regularly pass £2,000. On a percentage-based deposit fee that becomes a meaningful cost, so the flat £2 per Post Office deposit at Starling works out cheaper for his pattern of banking. He keeps a second account with a high street bank purely for the coin bags and the occasional conversation about an overdraft. Two accounts, one purpose each, and he stops worrying about which one is "best".
Aisha sells skincare online from Birmingham and ships to Ireland, France and the Netherlands. Her priorities are different again. She needs euros and dollars held in the same place as sterling, and she needs payment links she can drop into an email. She uses a paid multi-currency plan and treats the monthly fee as a business expense rather than a cost to minimise. Her warning to anyone in her position is to model the international transfer fee on last year's actual volumes, not on an optimistic guess.
Opening an account without wasting an afternoon
- Confirm eligibility first. Sole traders and limited company directors based in the UK are the standard requirement. Some providers exclude certain trades, so check the list before you start typing.
- Gather documents in one folder: photo ID, a recent utility bill or council tax letter in your name, your company number, and the registered address copied character for character from Companies House.
- Estimate your real monthly usage. Count transfers, cash deposits, card payments abroad and international payments from your last three months of statements.
- Apply during a weekday morning if you can. Identity checks and record matching tend to resolve faster when support teams are staffed.
- Keep the old account open for two full months. Redirect incoming payments, move direct debits one at a time, and confirm every standing order has landed.
- Set a calendar reminder to review the tariff after six months. Most owners overpay simply because they never revisit the plan they chose on day one.
Local support still exists where it matters. Post Office counters across the UK accept cash deposits for several app-based providers, which solves the problem for anyone outside a big city. Business support services run by local councils and growth hubs in cities such as Manchester, Glasgow and Bristol can point you towards lending and mentoring that a current account alone will not provide.
The small print that costs money later
Deposit protection deserves a plain explanation. A full banking licence with FSCS cover means eligible deposits are protected up to £85,000 per person if the institution fails. An e-money licence means your money must be safeguarded in separate accounts, which is a real protection but not the same guarantee. Neither structure is unsafe, and both are supervised by the Financial Conduct Authority. What matters is that you know which one you have signed up for, particularly if you plan to hold large balances for tax bills or supplier payments.
Watch the edges of the tariff as well. Overseas ATM withdrawals, card replacement fees, chargeback handling and interest on arranged overdrafts all sit outside the headline monthly price. If you employ people, check whether multi-user access and separate virtual cards are included or billed as an upgrade. If you use Xero, QuickBooks or FreeAgent, confirm the integration is native rather than a CSV export you have to build yourself.
Opening an online business bank account in the UK takes less time than it did five years ago, and the choice is genuinely better than it once was. The work is not in the application. It is in matching the account to how your money actually moves. Pull out three months of statements this week, tally what you really do, and apply to the one provider whose fee structure mirrors that pattern.
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