The shift away from branch appointments
Not long ago, a new limited company in Manchester or a sole trader in Cardiff could expect to wait weeks for a business banking appointment, then sit through an hour of paperwork for an account with a monthly charge attached. That queue has largely gone. Digital providers now open accounts in minutes, sometimes the same day, and the high street banks have spent the past few years trying to catch up with their apps.
The trade-off is choice, and choice brings confusion. There are now full-service digital banks, payment institutions that behave like banks, and traditional banks offering cut-down digital packages. They look similar on a comparison page. They behave very differently once money starts moving.
Three frictions come up again and again with owners I speak to. Paperwork that does not match the name on Companies House records. Cash takings with nowhere to go, because a purely app-based account has no counter. And per-payment charges that look trivial at 20p until a busy month arrives.
What to have ready before you apply
Most rejections and delays trace back to documents, not credit history. Get these sorted first and the application itself takes minutes.
- Business registration details. A Companies House number for a limited company, or your unique taxpayer reference if you trade as a sole trader.
- Photo ID for every director and anyone holding 25% or more of the shares. A passport or UK driving licence is standard.
- Proof of address dated within the last three months. Utility bills, council tax bills or bank statements are usually accepted. Mobile phone bills are often excluded.
- Your SIC code and a plain description of what the business does. Vague answers like "consultancy services" slow things down; "management consultancy for hospitality businesses" does not.
- Expected annual turnover. An honest estimate is fine. Nothing good comes from inflating it.
One detail trips up a surprising number of sole traders: the account name has to reflect the legal entity. If you trade under a made-up brand, the account will usually still be opened in your personal name, with the trading name displayed alongside.
Comparing the realistic options
| Provider | Monthly cost | Best fit | What stands out | Worth checking |
|---|
| Starling Business | No monthly fee | Most small firms wanting one account for everything | UK bank with compensation cover on eligible deposits, euro payments around £0.70 per £100 | No branch network; cash deposits limited |
| Monzo Business Lite / Pro | No monthly fee / £5 | Sole traders and directors who want simple, clear budgeting | Pots for tax money, accounting software connection on the paid tier | Lending products only for eligible sole traders |
| Tide (no-fee, Plus, Pro) | No monthly fee, £9.99 + VAT, £18.99 + VAT | Owners who want invoicing and bookkeeping in one login | Transfers included on paid tiers, cash in at Post Office and PayPoint | 20p per outgoing transfer on the entry tier |
| ANNA Money | No monthly fee | Very small firms that want invoicing built in | Quick setup, VAT and tax reminders | Less suited to complex multi-entity structures |
| Revolut Business | Around £30 for the main paid plan | Firms with frequent overseas clients | Multi-currency holding, team cards, spend controls | Not covered by the UK deposit protection scheme in the same way as a bank |
| Barclays / NatWest / HSBC | No monthly charge for an introductory period, then a monthly fee | Businesses that need branch access or lending | Relationship managers, cheque and cash handling | Higher per-item charges; slower onboarding |
Figures reflect published pricing at the time of writing and exclude VAT where the provider adds it. Rates change, so confirm on the provider's own tariff page before you commit.
Protection is the line worth reading twice. A licensed UK bank gives you compensation cover on eligible deposits up to £85,000 if it fails. Payment institutions are required to safeguard customer money in separate accounts, which is a different mechanism and not the same guarantee. For a business holding large balances for payroll or tax, that distinction matters more than a slick app.
Matching the account to the way you trade
Sole trader with a dozen invoices a month
Priya, a freelance illustrator in Bristol, started with a no-monthly-fee account and hit the transfer charge ceiling within two months. Ten client payments, a landlord transfer, a pension contribution and a supplier or two added up to more than the £9.99 subscription would have cost. She moved to a paid tier and stopped thinking about 20p.
The lesson is simple arithmetic. Count your outgoing payments for a typical month, multiply by the per-transfer fee, and compare that with the subscription that includes them.
Limited company with staff and receipts
A design studio in Leeds with four employees needed three things: separate cards for each person, receipts attached to transactions, and a clean feed into bookkeeping software. Directors-only access was the deal-breaker on the cheapest tiers. Multi-director access and expense cards with individual limits narrowed the field quickly.
Client work billed in euros and dollars
If a meaningful share of income arrives in another currency, the FX markup is your real cost, not the monthly fee. A 2.75% markup on card spending abroad sounds small until it applies to a year of supplier payments. Look at the spread on conversion, the charge per incoming payment, and whether you can hold a currency balance rather than converting on arrival.
The costs that hide in the tariff
Cash deposits are the classic one. Paying £40,000 a year in takings into an account that charges per £100 deposited can cost more than the monthly subscription by a wide margin. Check the Post Office and PayPoint arrangements before you assume cash is handled.
Then there is tax admin. Making Tax Digital means VAT-registered businesses file through compatible software, and many owners eventually file income tax quarterly too. An account that connects cleanly to Xero, QuickBooks or FreeAgent saves a monthly retyping session. Some providers bundle bookkeeping tools into their paid tiers, which is often better value than buying them separately.
Finally, overdrafts and lending. Digital accounts frequently offer no overdraft at all in the first year, and lending is decided by a separate team. If you need a buffer for seasonal cashflow, ask before you switch rather than after.
A short way to decide
Write down your monthly outgoing payment count, your cash intake, and the currencies you receive. Those three numbers eliminate most of the shortlist on their own.
Open the new account while keeping your existing one running for at least a month. Redirect incoming payments first, then standing orders and direct debits, and confirm each supplier has switched before you close anything. The Current Account Switch Service handles this formally and covers you if a payment goes astray during the move.
Then connect your accounting software and set aside a fixed amount into a separate pot each time a VAT or tax payment is due. The account is only doing its job when the money for HMRC is already ring-fenced before you see the balance.
Give it three months, then look at your actual fee line. If per-payment charges have overtaken the subscription cost, move a tier up. If you are paying for features you never open, move back down. Changing tiers takes a few taps, and no provider will charge you for doing it.
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