What are the most effective enterprise financial institution accounts within the UK?
Please note that most UK banks aren’t accepting business bank account applications from new customers at the moment. Read more at Most banks not allowing small businesses to open bank accounts
UK Finance has teamed up with UK banking providers to pull together some guidelines on what you need before you apply for a business bank account.
These rules only apply to existing businesses that have a turnover of less than £6.5 million, have a clearly defined ownership structure and all of the business’ owners operate in the UK.
In general, UK Finance recommends that you get the following bits of documentation ready in advance. Most business current account providers will be looking a few key pieces of information.
One document to prove your identity:
- Your full and valid UK or foreign passport
- Your national identity photocard
- Your full UK paper driving licence
- Your full UK or foreign photocard driving licence as issued by a member state of the EU or the EEA
One document to prove your address in the UK:
- Your full UK driving licence;
- Your full UK or foreign licence photocard driving licence as issued by a member state of the EU or EEU;
- UK or foreign bank or credit-card statement (must be less than three months old and not printed from the internet);
- UK mortgage statement (less than 12 months old and not printed from net);
- Council tax bill, payment book or exemption certificate (must be less than 12 months old);
- A letter or bill from a utility company (less than six months old, avoid mobile phone bill).
Business-wise, you’ll need:
- Your Companies House registration number (if you have one)
- Details about your business including turnover, tax information and other capital
- Details of all company directors or partners, including name, date of birth, address and National Insurance number
You can move through this guide on UK Finance to make sure you meet the requirements.
Once you’ve collected your documents, it’s time to choose an account. We’ve rounded up some of the favourites on the market.
To give you an idea of what to expect, we’ve created a table of the best business bank accounts in the UK, detailing each provider’s key offerings.
|Bank||Eligibility||Free banking period||Account fee thereafter||Cash transaction limit|
|HSBC||Businesses with up to £2 million turnover||18 months (12 months for switching businesses)||£6.50 a month (for the free banking period)||Up to £3,000 cash per month. 0.50 per cent per £100 exceeding that limit|
|Santander||Trading for less than 12 months and business is opening first business account with Santander||18 months||£7.50 a month||£1,000 per month with 70p per £100 exceeding the limit|
|TSB||Open to sole traders, partners and directors||25 months||£5 (waived if your average balance in the month is £10,000 or more)||N/A|
|RBS / Natwest||Over 18s who have a right to be self-employed in the UK||18 months||Cost per transaction on Standard Tariff (see below)||N/A|
|Lloyds / Bank of Scotland||New businesses who have an anticipated turnover of up to £3 million for the Business Current Account||18 months (6 months for those switching from another business account)||£6.50||N/A|
|Barclays||Suitable for most businesses with a turnover of up to £6.5 million. Specific criteria for businesses in certain sectors e.g. agriculture, social housing||12 months||£6 a month (Mixed Payments Plan) £6.50 a month (e-Payments Plan)||N/A|
|Yorkshire Bank||Businesses must have a turnover of under £2 million and have opened their account within 12 months of starting||25 months||£6.50 a month (Business Banking Tariff)||£250,000 per year|
|Clydesdale Bank||Businesses must have a turnover of under £2 million and have opened their account within 12 months of starting||25 months||£6.50 a month (Business Banking Tariff)||£250,000 per year|
|Metro Bank||Businesses must have a turnover under £2 million||N/A||£0 on account balances over £5,000 and £5 a month for balances under £5,000 (see below)||N/A|
If you start your business with HSBC, you’ll bag free banking (that means no maintenance fee or payments into an account covered by standard account charges) for the first 18 months. If you’re switching from another account, it’s free. After that it’s £6.50 a month for 12 months. Your account will be reviewed every subsequent year to make sure you’re always on the best standard tariff for your small business’ needs.
You can deposit up to £3,000 a month at this point and then 0.50pc of the value of cash paid in over this limit.
The account is available to businesses with up to £2 million turnover. Within the business current accounts, you’ve got a choice between the electronic banking tariff or the small business tariff depending on how you do your business banking.
Compare HSBC business banking on NerdWallet
With Santander you’ve got a couple of options on the current account front.
Business Current Account
This one’s open to you if you’ve been trading for less than 12 months and your business is opening its first business current account with Santander.
It comes with an arranged overdraft on an unsecured basis from £500 up to £25,000. To qualify you must have a good credit history and not have been declared bankrupt or have had an IVA within the past six years. On top of that, you must not have been a disqualified director of a failed business within the same time period.
After the first 18 months the account costs £7.50 a month with a cash deposit monthly limit of £1,000 and 70p per £100 deposited in excess of this monthly limit.
You can also nominate colleagues to have access to your account to help you manage the business finance.
There’s no minimum or maximum opening deposit or maximum balance to get started.
1|2|3 Business Current Account
The main draw of the 1|2|3 Business Current Account is the cashback. The rate of cashback you receive is dependent on how much you deposit into your account each year and will be at a rate of 1pc, 2pc or 3pc. This cashback will be paid on the first £10,000 deposited into your account per year.
That’s 1pc on turnover of less than £200,000 – you’ll get up to £100 of cashback per year; 2pc on turnover of £200,000+ – (£200 cashback per annum); 3pc on £300,000 – (£300 cashback per annum).
Other than that, it’s much the same as the Business Current Account.
Whether you’re on the start-up or the switcher offer, you’ll be paying £5 a month in fees. After your first 18 months (12 months for switchers) you’ll be put on the £12.50 account which also has a £1,000 monthly deposit limit and 70p per £1000 in excess of that limit.
Compare Santander business banking with NerdWallet
TSB’s Business Plus account has 25 months of free business banking for sole traders, partners and directors. It doesn’t matter if you’re switching or are opening a brand-new bank account.
After that you’ll be paying £5 a month which will be waived if your average balance over that month is £10,000 or more.
If you prefer to bank in-branch, there are over 500 TSBs around the UK where you can do your banking.
It comes with a free Square reader with no fees to pay on your first £1,000 of sales. To keep up with your finance, opt into text alerts with regular account balances and transactions.
Barclays offers start-up and normal business accounts.
You’ll get free banking for 12 months with the start-up business account. Plus, receive expert advice from Barclays’ Business Direct team in the early months for support in helping you grow. They’ll help you shape your business strategy, figure out your cash flow management and forecasting and guide you through lending and trading abroad.
The established business doesn’t give you free banking, but you’ll get a percentage of your charges back depending on your annual credit turnover and how long your account has been open.
As for payment plans, both have mixed payment plan which is great for businesses that use cash, cheques or mixed methods to make and receive payments. There’s also e-payment for those that receive electronic payments and make payments through online banking and debit cards.
Natwest / RBS
There’s a choice between two bank accounts with NatWest: Startup and Business. They’re open to those over 18 who have a right to be self-employed in the UK.
More specifically, the Startup account is open to businesses that have been trading for less than a year and have a turnover of less than £1 million. It has free banking for 18 months, moving onto the Standard Published Tariff.
The Business account is available to those who have been trading for over a year with a turnover of up to £2 million. It gives you access to benefits and services like FreeAgent accounting and Business Boost along with your own Relationship Manager.
Business overdrafts are available with no set minimum to pay back each month. You can borrow up to £50,000 unsecured (subject to approval).
It’s much the same story with RBS.
Lloyds / Bank of Scotland
With Lloyds and Bank of Scotland, new businesses with an anticipated turnover of less than £3 million get 12 months of day-to-day banking for free with the Business Current Account whether you’re switching or opening a new account. All of the accounts have free electronic payments and simple pricing structures.
You can get extra support from products like business loans, insurance, overdrafts and charge cards.
Halifax doesn’t have a business bank account offering at this time.
Yorkshire Bank has a generous free banking period of 25 months, covering free day-to-day banking for qualifying switchers and start-ups. Your business must be turning over less than £2 million with an annual cash transaction limit of £250,000.
It’s open to businesses who switch to one of the banks’ current account or start-ups who open a business account within their first 12 months.
Find out more about the Yorkshire Bank Business Current Account
Clydesdale Bank‘s offering is the same as the one from Yorkshire Bank, with 25 months of free banking for businesses with a turnover of less than £2 million. The cash transaction limit is also £250,000.
Compare business banking at Clydesdale Bank with NerdWallet
As well as bank accounts for larger businesses, Metro Bank has a specialist account for start-ups and SMEs who have a turnover under £2 million.
If your balance stays above £5,000 for the whole month, Metro Bank will waive your monthly account maintenance fee. Otherwise it’s £5 for that month. If you stay over £5,000 you get 50 fee-free UK transactions for a month with 30p per transaction in excess of that. Accounts that go below £5,000 will pay 30p per UK transaction.
Of course, a small handful of digital banking platforms have appeared in recent years. Here’s a quick breakdown of their their headline features.
|ANNA||Smart invoicing, automatically chase outstanding payments||Free if your monthly income is under £500
£5 a month if your monthly income is £500-£2,000
£9.90 a month if your monthly income is £2,000-£20,000
£19.90 a month if your monthly income is £20,000-£500,000
|Revolut||Hold, exchange and transfer currencies with real exchange rate, issue free corporate cards to employees, perks from commercial partners||Companies pay between £0 – £100 a month, depending on the account (or they can speak to Revolut and get a bespoke deal)
Freelancers pay £0 for the free account, £7 a month for the Professional account and £25 a month for the Ultimate account
|Starling Bank||No monthly fees, categorised transactions, integration with Xero, FreeAgent and Quickbooks, overdraft facility||No monthly fee
Can add a monthly £7 ‘business toolkit’ for extra functionality
|Tide||No fees on card payments in UK or abroad, free transfers between Tide accounts, Tide Mastercard, instant invoicing, integration with FreeAgent, Sage and Xero||Free (£0)
Plus Cashback (£49.99)
|Monzo||Integrations with Xero, FreeAgent and QuickBooks; set aside a percentage of your earnings to put towards tax every time you’re paid||Lite: Free
ANNA is open to any UK resident who is a director of a limited company and non-limited businesses that are structured as a partnership or sole trader.
On the app you’ve got smart invoicing, creating sales and purchase invoices for you in under ten minutes. It’ll politely chase outstanding payments that you’re owed and you’ll be notified about VAT, corporation tax and self-assessment tax return deadlines. In the future it’ll introduce payroll services.
ANNA is free if your monthly income is under £500; £5 a month if it’s £500-£2,000; £9.90 a month if it’s £2,000-£20,000 and £19.90 a month if it’s £20,000-£500,000.
Compare ANNA business banking with NerdWallet
Revolut is a good shout for businesses who travel and trade overseas. Customers can hold, exchange and transfer over 28 currencies with the real exchange rate.
You can issue physical and virtual cards and track your employees spending in real time.
Revolut comes with perks and benefits from partners such as Apple, Google Ads, Deliveroo and Samsung.
In terms of accounts you’ve got:
- Free (£0 a month)
- Grow (£25 a month)
- Scale (£100 a month)
- Enterprise (bespoke – speak to Revolut)
Freelancers can choose from the free account (£0 a month) Professional (£7 a month) and Ultimate (£25 a month).
Compare Revolut business banking with NerdWallet
The Starling Bank business account is open to you if you’re self-employed or the owner of a limited company, a limited liability partnership or if you’re part of a limited company with multiple owners.
There’s no monthly charge on the account and it comes with an overdraft. If you’re running a limited company, you can apply for an overdraft up to £150,000. To boost your business’ functionality, you can add on a toolkit for £7 a month. Extra tools include invoices and auto-matching, email integrations and VAT recorded on transactions
If you want to deposit up to £20,000 cash, you can do so at Post Office branches across the country. It’ll set you back £3 per deposit.
What’s more, you can integrate your Starling Bank business account with Xero, FreeAgent and Quickbooks.
With Tide there are no fees on card payments in the UK or abroad and you get free transfers between Tide accounts. ATM cash withdrawals are £1.
Order up to 35 Team Cards and keep track of who’s spending what. Set up sub-accounts to ringfence money for expenses.
You’ve also got invoicing and the ability to set up scheduled payments. The package is rounded off with in-app support as well as integration Xero and QuickBooks.
There are three accounts available through Tide: Free (£0), Plus (£9.99) and Plus Cashback (£49.99).
Compare Tide business banking with NerdWallet
Monzo is the latest of the digital banking platforms to introduce business banking. Open an account if you’re a sole trader or the director of a registered limited company by shares (Ltd). Multi-user access is available for limited companies. Just be aware that you need to have a personal account with Monzo before you can apply for a business account.
Accounts aren’t available to the some types of businesses but this may be reviewed in future.
To limit financial crime, you can pay in £5-£300 of cash in one go, and up to £1,000 every six months. If you’re aged 16 or 17, that limit is lower, so you can pay in up to £500 every six months.
As for features, Monzo integrates with Xero, FreeAgent and QuickBooks. With Monzo Business Pro, new Xero users can get six months of the cloud accounting platform free on the Business Pro account. It also has a Tax Pots feature, where you can set aside a percentage of your earnings to put towards tax every time you’re paid. What’s more, you can opt to be notified every time you get paid.
The pricing is on two tiers: Lite offers up the basics but for additional features like integrated accounting and Tax Pots you’ll need to go Pro at £5 a month.
This article has been brought to in association with NerdWallet.