The choice that shapes your cash flow for years
Screenshots of banking apps all look similar. The differences show up six months in, when you are chasing a late invoice, paying a supplier in euros, or handing a shoebox of receipts to your accountant.
Three pressures come up again and again for UK businesses. Card and invoice payments now dominate, but plenty of trades, market traders and cafés still handle notes and coin, and cash deposit charges vary enormously between providers. Almost every accountant here works inside Xero, QuickBooks, FreeAgent or Sage, so the quality of the bank feed decides how much you pay for bookkeeping. And switching feels risky because direct debits, payroll runs and HMRC payments all sit on the old account.
Then there is the paperwork. Since Companies House tightened identity checks on directors and people with significant control, applications that would once have sailed through can stall on a mismatched address or an unverified director. A rejected application rarely has anything to do with your credit score. It is usually a detail.
What the main options actually cost
| Provider | Monthly fee | Best suited to | Cash and cheques | Deposit protection | Worth knowing |
|---|
| Starling Business | £0, optional toolkit £7 | Sole traders and simple limited companies | Post Office deposits for a small percentage fee, cheque imaging in app | FSCS up to £85,000 | UK-resident directors only, no corporate shareholders |
| Monzo Business | £0 Lite, paid tier under £10 | Owners who want a clear view of tax money | £1 per cash deposit at Post Office or PayPoint | FSCS up to £85,000 | No partnerships or charities, accounting links sit on the paid plan |
| Tide | £0 Lite with 20p per outgoing transfer, paid plans £12.49 to £69.99 | Freelancers who need a sort code today | Post Office deposits charged a percentage | Protected through its partner bank | 2.75% card fee on foreign currency spending |
| Mettle (NatWest) | £0 | Small limited companies already using FreeAgent | Limited cash handling | FSCS up to £85,000 | Two owners maximum, one director with account access |
| Revolut Business | £0, paid tiers from around £25 | Businesses invoicing in several currencies | Card-led, weak on cash | Check the current protection status before holding large balances | Support is app-based, no branch escalation |
| Lloyds, NatWest, TSB, Bank of Scotland | £0 for an introductory period, then typically £5 to £10 | Businesses wanting a branch, a named manager or lending | Branch and Post Office deposits | FSCS up to £85,000 | Charges return once the offer ends, onboarding is slower |
The introductory offers on high street accounts are genuinely generous. Some run without a monthly fee for a year, others for longer, and a few waive charges while your balance stays above a set threshold. Read the exit date before you sign, because the account that costs nothing in month three can cost £10 plus transaction fees by month fifteen.
For a limited company, the cheapest headline price is rarely the cheapest total. Add up cash deposit fees, overseas payment charges, the cost of the accounting add-on and any per-transfer fee above the included allowance. That sum is your real monthly cost.
Three owners, three different answers
Sarah runs a copywriting business from a spare room in Bristol. She invoices eight regular clients, takes card payments through a payment link and almost never touches cash. Her first online business bank account was a no-monthly-fee option with a 20p charge on every outgoing transfer, which looked harmless until a month of supplier payments and tax transfers added up. She moved to a no-fee account with full deposit protection and free UK transfers, kept the invoicing tool she already used, and put the difference into her tax pot instead. Her accountant noticed the difference immediately, because the bank feed stopped needing manual tidying at year end.
Dan and Priya trade online and at weekend markets, selling homeware imported from Europe. One account alone could not do the job. They run domestic takings through a UK account with a small percentage fee on cash deposits, and settle supplier invoices through a multi-currency online business account that converts at the interbank rate. Paying in euros from a sterling account would have cost them a markup on every order. They now check the FX fee before adding any new provider, not the monthly fee.
Marcus is a two-director consultancy using FreeAgent. He picked the NatWest-backed option that bundles the software he already pays for, because the saving on the subscription outweighed the slightly narrower eligibility rules. His advice to other owners is blunt: work backwards from the tools you already use, not from the app store ranking.
Before you apply, get these details straight
Have your company number or Unique Taxpayer Reference ready, along with a photo ID and proof of address for every director who needs access. Match the address on those documents to the one on your Companies House record, including the flat number and postcode formatting. Confirm your SIC code and expected turnover, and decide whether you want card machines, a credit facility or expense cards for staff. If you are VAT registered, note the number.
Most online applications take between ten minutes and half an hour. Approval is often same day for straightforward sole traders and single-director companies, while anything with overseas directors, complex ownership or a very new incorporation can take a week or more. Applying for two accounts in parallel is common practice, and entirely sensible: an e-money provider to start invoicing immediately, and a fully licensed bank account for the long-term balance.
A sequence that avoids most of the friction
- Write down what your business actually handles in a month. Card takings, bank transfers, cash, cheques, foreign currency, staff expenses.
- Compare three providers on total monthly cost, not the headline fee.
- Apply to the account that fits your paperwork today, not the business you hope to be in three years.
- Keep your old account open until every direct debit and standing order has moved. The Current Account Switch Service handles this in about seven working days and redirects stray payments for three years, though not every digital provider is signed up to it.
- Set aside VAT and corporation tax the moment money lands, using a second pot or savings space.
- Book a fifteen-minute call with your accountant to confirm the bank feed works before your first quarter closes.
Useful local starting points include the Federation of Small Businesses for template policies and banking guidance, Post Office counters under the banking framework for deposits, and the British Business Bank if you later need a start-up loan. Your accountant is usually the fastest source of advice on which feed their software handles best.
The account you open this month will process every invoice, refund and tax bill for years. Give it an hour of proper comparison now, and it stops being a decision you think about at all. Start with the three-month cost estimate, then apply to the provider whose weak spots you can actually live with.
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