What UK business banking looks like right now
Opening a business bank account online now takes most founders under an hour. The application lives in an app, the identity check is a video selfie, and the card turns up a few days later. That speed hides a set of problems that only surface once money starts moving.
The first is eligibility. Branchless providers tend to want a simple structure: one or two directors, no complicated group ownership, a UK residential address for every signatory. Two-director companies sail through at some providers and get turned away at others. Businesses that run on cash, from takeaways in Birmingham to market stalls in Leeds, often fail onboarding because app-only banks cap how much cash they will accept.
The second is the charge that arrives quietly. An account with no monthly fee can still bill you for paying in cash, for a transfer above your allowance, or for a replacement card. Others waive the monthly fee for a year, then charge £8 or thereabouts once that period ends. Nobody reads the tariff on day one, which is exactly when it matters least.
The third is tax admin. Making Tax Digital for Income Tax now applies to sole traders and landlords with qualifying income above £50,000, with the threshold planned to fall to £30,000 next April and £20,000 the year after. Quarterly updates need digital records kept in compatible software, so the account you choose shapes how painful January feels.
Choosing by how your business earns, not by brand
A freelancer with clients in Amsterdam cares about the exchange rate, not the app design. A shop taking £40 in coins every hour cares about deposit fees. A contractor whose bookkeeper lives in Xero cares about integration above everything else.
Starling Bank is a full UK bank with no monthly fee on its business current account and no charge on UK payments, which makes it a sensible default for anyone invoicing regularly. Cash is the weak spot: deposits at the Post Office cost 0.7% with a £3 minimum. Monzo Business runs a Lite plan with no monthly fee and a Pro plan at £5 a month adding tax pots and accounting sync. Tide leans towards invoicing, with its entry plan allowing five transfers a month before 20p each applies. Mettle runs on FreeAgent and suits single-director companies. Revolut Business starts at £10 a month and reaches £125 on its top plan, pitched at firms holding several currencies. HSBC still offers branches and a named contact, with the monthly fee waived for the first 12 months and £8 a month afterwards.
| Provider | Monthly cost | Best fit | Cash and cheques | Worth knowing |
|---|
| Starling Bank | No monthly fee | Freelancers and limited companies moving money often | Post Office deposit at 0.7%, £3 minimum; cheque imaging in-app | Cash-heavy trades may not be accepted |
| Monzo Business | Lite at no monthly fee, Pro at £5 | Sole traders and directors wanting tax pots | £1 per deposit at PayPoint or Post Office | Accounting integrations sit on the paid plan |
| Tide | Entry plan at no monthly fee, Plus £9.99, Pro £49.99 | Invoicing and software integrations from day one | Post Office deposits carry a fee | 20p per transfer once the allowance runs out |
| Mettle | No monthly fee | Single-director companies and sole traders on FreeAgent | Limited cash handling | Ownership rules are strict |
| Revolut Business | Basic £10, Grow £35, Scale £125 | Importers, exporters, multi-currency work | Deposit limits apply | Costs climb with features you may not use |
| HSBC Small Business | No fee for 12 months, then £8 | Businesses wanting a branch and a named contact | Branch and Post Office services, charges after year one | Tariff changes after the intro period |
One check that is easy to skip: is your provider a bank or an electronic money institution? A licensed bank holds deposits under its own permissions, with eligible balances covered by the Financial Services Compensation Scheme up to £85,000 per person. E-money providers safeguard client money at a partner bank instead, and the protection route works differently. That is no reason to walk away, but it is worth knowing before you leave a large balance sitting somewhere.
Three businesses, three different answers
A Cardiff takeaway owner was turned down by two app-only providers before a high street bank took her on. She now pays in notes at a branch twice a week, which suits weekend-heavy cash flow better than a queue at a machine.
A Manchester software contractor gets paid in euros and pounds, so a multi-currency business account with clear conversion pricing saved more in a month than any monthly fee would have cost in a year.
An Edinburgh design studio with two directors picked Starling, mainly because both could hold cards and see the same dashboard. They moved across with the Current Account Switch Service, which transfers direct debits and standing orders and redirects incoming payments, and lost an afternoon to admin rather than a week.
Opening, switching and staying out of trouble
- Collect documents first: photo ID, proof of address for each signatory, Companies House details or sole trader records, and one piece of evidence of trading such as a client invoice or supplier contract.
- Match the account to your cash flow rather than to the sign-up offer. Weekly coin and note handling means deposit fees come first. Overseas invoicing means the conversion margin comes first.
- Confirm the software works before committing. Xero, QuickBooks, FreeAgent and Sage are the usual integrations, and most entry plans either bundle a subscription or connect to one.
- Keep the old account open until the switch completes. Direct debits fail quickly when a number changes on the wrong day.
- Review the tariff after three months. Charges that felt invisible at sign-up become obvious once real volume runs through.
Regional help is thinner than it once was but still worth using. Business Gateway covers Scotland, Business Wales runs advice clinics for founders in Cardiff and Swansea, Invest Northern Ireland advises on cross-border payments, and growth hubs in England still run short finance workshops. The Post Office network, with more than 11,500 counters, remains the practical answer for cash deposits on most app-based accounts.
Rejection is usually fixable. Nine times out of ten it comes down to a name mismatch, an address that does not match the electoral roll, or a business activity the provider does not cover. Correct the details and reapply, or ask which of their products would accept your trade.
Pick one account this week and push a real month through it: a cash deposit, a supplier payment, a client invoice. The statement at the end of that month will tell you more than any comparison table, including this one. If the numbers look wrong, switch, and keep the paperwork tidy for the next quarterly update.
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