Where UK business banking stands right now
The application itself has become the easy part. Digital providers verify a passport or driving licence with a selfie, cross-check your Companies House record and hand you account details in minutes rather than weeks. High street banks have improved, yet plenty still want a phone call, a proof-of-trading document and occasionally a visit to a branch that may be forty miles away. For a newly formed limited company with no trading history, that gap between "registered" and "banked" is where deals quietly fall through.
The bigger fork in the road is what sits behind the account. A full UK banking licence means eligible deposits fall under the Financial Services Compensation Scheme, currently up to £120,000 per person per institution. Several of the best-known app-based providers hold one; others operate as e-money institutions, where your money is safeguarded in a segregated account rather than covered by that scheme. Neither model is unsafe, but they are not the same promise, and the difference only matters on the day something goes wrong. Ten minutes on the FCA's Financial Services Register tells you which one you are looking at.
Cash still trips people up. A market trader in Leeds, a café in Cardiff or a plumber taking notes on a doorstep all need somewhere to pay in physical money, and a fair number of digital accounts simply do not accept it. Those that do often route deposits through the Post Office or PayPoint, at around £1 to £2 per deposit. Over a year of weekly takings, that is a real line in your margins.
Then there is structure. Some providers welcome sole traders and limited company directors but turn away partnerships and LLPs entirely. Others cap the number of transfers included each month, then charge around 20p for each one after that. None of this appears on the homepage headline.
What separates one provider from another
| Provider | Monthly fee | Suits best | Standout features | Watch out for |
|---|
| Starling Bank | £0; optional Business Toolkit around £7 | Sole traders and limited companies wanting a full banking licence | Accounting feeds, instant notifications, £2 per Post Office cash deposit | No branch network; limited lending products |
| Monzo Business | £0 Lite; £5 Pro | Small Ltds and sole traders who live in the app | Tax Pots, invoicing, virtual cards on Pro | £1 cash deposit fee; some features sit behind Pro |
| Tide | £0; Smart around £12.49; Pro around £27.49 | Freelancers and contractors | Built-in invoicing, Sage feed | Five transfers then 20p each on the entry plan; no overdraft; partnerships excluded |
| ANNA Money | £0 pay-as-you-go; paid tiers from around £14.90 | Micro-companies wanting bookkeeping and tax filing in one place | VAT and Corporation Tax filing in-app | Mobile-first; less suited to complex stock or multi-currency work |
| Revolut Business | £10 Basic; £35 Grow; £125 Scale | Businesses paying overseas suppliers | Multi-currency holding, bulk payments on higher tiers | Exchange allowances differ sharply by plan |
| Wise Business | £0 | Importers and exporters | Transparent FX around 0.4–0.6% | E-money model, not deposit-protected; not a full current account |
Prices move, so treat the figures as a starting point and confirm on the provider's own pricing page before you commit.
Matching the account to how you actually trade
A freelance illustrator in Bristol, Sarah, spent her first year on a personal account because the business one "could wait". Her first VAT invoice from a publisher forced the issue: the payment reference did not match, and the money bounced back twice. She moved to a no-monthly-fee account with proper invoicing and a tax pot, and now sets aside VAT the moment an invoice clears. The fix was not exotic. It was simply an account built for business receipts.
Dev runs a small components importer in Manchester. His problem was currency. Stock is priced in euros, customers pay in sterling, and his old bank took a slice on every conversion plus a flat fee on each outgoing payment. Switching to a plan with a monthly exchange allowance and clearer transfer pricing cut a noticeable chunk from his cost per order. He also keeps a euro balance now, so he can buy when the rate looks reasonable instead of converting in a panic.
A farm shop in North Yorkshire has the opposite need. Most of its takings arrive as notes and coins, and several app-only accounts were ruled out on that basis alone. The owner kept a digital account for supplier payments and direct debits, and chose one that accepts Post Office deposits for the till float. Two accounts, one clear purpose each, and no awkward workarounds at the counter.
Partnerships deserve a mention of their own. If you trade as an LLP, check eligibility before you download the app, because a rejection after you have already told clients your new details exist is a headache nobody needs.
A short checklist before you hit apply
- Confirm the legal structure the provider accepts, and whether you can add a second director or signatory later without reopening the account.
- Look up the firm on the FCA register and note whether deposits are scheme-protected or safeguarded.
- Count your monthly transactions, including incoming payments, and compare that with any included-transfer allowance.
- Work out how cash reaches the account, and what each deposit costs.
- Check the accounting tools you already use appear in the integration list, especially if you report under Making Tax Digital.
- Ask what happens if you switch later. Not every business account qualifies for the Current Account Switch Service, so redirecting payments may fall to you.
- Keep your Companies House details, proof of address and a recent supplier invoice or client contract ready, since most checks stall on documents rather than decisions.
Useful starting points include the FCA's register, HMRC's Making Tax Digital guidance, and the Business Support Helpline for England, with Scottish Enterprise, Business Wales and Invest Northern Ireland covering the devolved nations.
Opening the account is the simple bit. The decision that pays off is the one made after you have counted your transfers, your cash and your currencies, rather than the one made because the app looked nice on the first screen. Start with the three figures that shape your year, monthly fee, deposit cost and currency spread, and the shortlist tends to shrink on its own.
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