Keeping your business and personal finances separate makes tax returns easier and helps you stay organised. Here are the best bank accounts for self-employed workers and sole traders.
Do You Need a Business Bank Account?
| Business type | Separate account required? | Recommended? |
|---|---|---|
| Sole trader | No (legally) | Yes (strongly) |
| Partnership | No (legally) | Yes |
| Limited company | Yes (legally) | Required |
| Freelancer (sole trader) | No | Yes |
What to Look for in a Business Account
| Feature | Why it matters |
|---|---|
| Monthly fee | Free is best for low-turnover businesses |
| Transaction fees | Some charge per payment in/out |
| Free banking period | Many offer 12–24 months free for new businesses |
| Accounting software integration | Links to FreeAgent, Xero, QuickBooks |
| Invoicing tools | Send invoices from the app |
| Tax savings pots | Set aside money for tax automatically |
| Cash deposit facilities | If you receive cash payments |
| Overdraft or credit | Available if you need cash flow support |
| App quality | Mobile-first management is essential |
| FSCS protection | Up to £85,000 — ensure the provider is UK-regulated |
Best Free Business Accounts
| Account | Monthly fee | Free period | Transaction fees | Key features |
|---|---|---|---|---|
| Starling Business (Sole Trader) | £0 | Permanently free | None for electronic payments | Auto-categorisation, accounting integrations, tax pots, Apple/Google Pay |
| Monzo Business Lite | £0 | Permanently free | None | Invoicing, tax pots, accounting integrations |
| Tide Free | £0 | Permanently free | None for bank transfers; £0.20 per card payment | Invoicing, expense management, HMRC tax estimation |
| Mettle (NatWest) | £0 | Permanently free | None | FreeAgent integration (free), invoicing |
| Revolut Business Free | £0 | Permanently free | 5 free transfers/month, then £0.20 each | Multi-currency, analytics |
Best Accounts with Free Banking Period
| Account | Monthly fee after free period | Free period | Key features |
|---|---|---|---|
| HSBC Business Account | £8/month | 12 months free | Branch access, international payments, overdraft |
| Lloyds Business Account | £7/month | 12 months free | Branch access, card payments, overdraft |
| NatWest Business Account | £5/month (Start Up) | 12 months free | Branch access, integrated bookkeeping |
| Barclays Business Account | £7/month | 12 months free | Branch access, Barclays SmartBusiness tools |
| TSB Business Plus | £7.50/month | 25 months free | Branch access, electronic payments included |
Comparison: Digital vs Traditional Banks
| Feature | Digital banks (Starling, Monzo, Tide) | Traditional banks (HSBC, Lloyds, NatWest) |
|---|---|---|
| Monthly fee | Usually £0 | £5–£12/month (after free period) |
| Branch access | None (or partner locations) | Yes |
| Cash deposits | Post Office or cash deposit agents | Branch + Post Office |
| App quality | Excellent | Improving but generally behind |
| Setup speed | Minutes (online) | Days to weeks |
| Cheque facilities | Limited or none | Yes |
| Overdraft | Limited | More widely available |
| International payments | Good (especially Revolut, Wise) | Available but often expensive |
| Accounting integration | Strong (FreeAgent, Xero, QuickBooks) | Some — varies by bank |
| Best for | Low-cost digital businesses, freelancers | Businesses needing branches or cash handling |
Best for Specific Needs
Best for Freelancers
| Account | Why |
|---|---|
| Starling Business | Free, excellent app, tax pots, integrates with FreeAgent/Xero |
| Mettle (NatWest) | Free FreeAgent subscription included — worth £17/month |
| Monzo Business Lite | Free, good categorisation, invoicing |
Best for Cash Deposits
| Account | Cash deposit method | Cost |
|---|---|---|
| Starling Business | Post Office | Free up to £1,000/month, then 0.7% |
| HSBC Business | Branch or Post Office | Varies by plan |
| NatWest Business | Branch or Post Office | Varies by plan |
| Tide | PayPoint locations | 1% of amount deposited |
Best for International Payments
| Account | Multi-currency? | FX fees |
|---|---|---|
| Revolut Business | Yes — 25+ currencies | Low (interbank rate + small markup) |
| Wise Business | Yes — 40+ currencies | Low (transparent mid-market rate) |
| Starling Business (Euro account) | EUR sub-account | No monthly fee, competitive rates |
| HSBC Business | Yes | Higher fees |
Best for Accounting Integration
| Account | Integrates with |
|---|---|
| Mettle (NatWest) | FreeAgent (free subscription included) |
| Starling Business | FreeAgent, Xero, QuickBooks |
| Tide | FreeAgent, Xero, QuickBooks, Sage |
| Monzo Business | FreeAgent, Xero, QuickBooks |
Tax Pots and Tax Savings
| Bank | Tax pot feature |
|---|---|
| Starling | Create savings “Spaces” — set aside % of income for tax |
| Monzo | Tax pots — automatically move a percentage of income |
| Tide | Tax estimation tool — estimates your tax bill |
| Mettle | FreeAgent integration estimates tax due |
Tip: Set aside 25%–30% of all income for tax and NI. Open a tax pot and automatically sweep this amount each time you receive payment.
Switching Business Accounts
| Detail | Information |
|---|---|
| Business Current Account Switch Service | Available for business accounts — guarantees a smooth switch |
| Timeline | 7 working days |
| What transfers | Direct debits, standing orders, incoming payments redirected |
| Is it available for all banks? | Most major banks participate |
| Should you keep the old account open? | Consider it temporarily — in case clients pay to the old account |