How UK business banking changed
A decade ago the choice was a branch, a paying-in book and a tariff nobody fully understood. The branch has largely gone. Starling Bank now reports more than 500,000 business customers, and Monzo puts its business base above 400,000. Both are app-first, both hold full UK banking licences, and eligible deposits sit under the Financial Services Compensation Scheme up to £85,000 per bank.
The bigger shift is in how banks earn. Cash handling used to be folded into the monthly fee. Now it is priced line by line: Starling charges 0.7% on Post Office cash deposits with a £3 minimum, Lloyds charges £0.85 per £100 at a deposit machine and £1.60 over the counter, Monzo charges £1 per cash deposit. Run a barber's, a café or a market stall and that is the number to check first, not the headline monthly fee.
Tax software is the third change. Making Tax Digital for Income Tax now covers sole traders above the £50,000 income threshold, and digital records are expected rather than optional. An online business bank account that talks directly to Xero, QuickBooks or FreeAgent saves a weekend of typing every quarter, and it saves more than that if your bookkeeper bills by the hour.
Where UK owners get caught out
Three patterns come up again and again.
The fee holiday that ends quietly. Most high street offers are customer acquisition deals, not permanent pricing. Santander gives start-ups 18 months of no-fee everyday banking before £7.50 a month applies. Lloyds gives 12 months, then £10. NatWest gives two years when you complete a full switch. None of this is secret, but it is buried three pages into the tariff. Put the end date in your calendar on the day you open the account, along with the amount you will be paying afterwards.
Cash that costs more than it looks. A £400 Saturday take dropped at a Post Office counter costs £2.80 on Starling's rate. Do that four weekends a month and you have spent more than a Monzo Pro subscription. Volume changes the maths. Below about £1,000 a month in cash, per-deposit charges rarely decide anything. Above £4,000, they decide almost everything.
Ownership the app cannot handle. A sole trader needs very little beyond a debit card and a clean export file. A limited company with two directors and a part-time bookkeeper needs separate access levels, and some challenger accounts still support only one login. Starling lets you add directors registered at Companies House. Monzo's multi-user access sits on the paid Pro plan at £5 a month. Check this before you build your company around a bank.
The international question deserves its own line. If you sell to EU or US customers, the exchange spread costs more than any monthly fee. Wise and Revolut are built for cross-border payments, though their deposit protection arrangements differ from a standard UK bank, so treat them as a second account rather than a replacement.
Comparing the main options
| Provider | Monthly cost | Standout features | Watch-outs |
|---|
| Starling Bank | No monthly fee | 0.7% cash deposit at Post Office (£3 minimum); cheque imaging in-app; bookkeeping tools inside the app | Cash-heavy weeks add up; no branch network |
| Monzo Business | Lite no monthly fee; Pro £5 | £1 cash deposits at PayPoint and Post Office; Xero, QuickBooks and FreeAgent links on Pro | Most useful extras sit behind the paid plan |
| Tide | No-fee entry plan; paid tiers from around £10 | Invoicing, expense cards, member offers | Per-transfer charges on the entry plan |
| NatWest Business | No monthly fee for two years when switching | FreeAgent included; relationship manager above £500,000 turnover | Standard tariff applies once the offer ends |
| Santander Business Current Account | No monthly fee for 18 months for start-ups, then £7.50 | Branch and Post Office access; cashback on the 1 2 3 account | The fee lands quietly in month nineteen |
| Lloyds Business Bank Account | No monthly fee for 12 months, then £10 | Branch and deposit machine access; payments up to £250,000 a day | Cash at £0.85 per £100 by machine, £1.60 over the counter |
Monthly cost is the least useful column on its own. Work out three numbers for your own business: cash deposited each month, outgoing payments each month, and whether a second person needs login access. Those three decide most of the table.
Before you apply
- Count your cash. Add up three months of takings and divide by three. If the answer is under £1,000, ignore cash fees and choose on app quality and accounting links. If it is over £4,000, get a quote from a bank with counter deposits before anything else.
- Total your payments out. Wages, suppliers, VAT and card settlements. Per-payment charges matter more at 60 transfers a month than at eight.
- Test the accounting link. FreeAgent comes bundled with NatWest business accounts, while Starling, Tide and Monzo Pro connect to Xero and QuickBooks. Ask your accountant which one they actually use before you commit.
- Read the post-offer tariff, not the landing page. Search the fee schedule for "cash", "international" and "additional user", then compare those lines.
- Keep a second account open with a small balance. Not loyalty, just resilience when a payment outage lands on payroll day.
A few local resources are worth bookmarking. The Post Office branch finder shows which counters still take business cash in market towns and rural areas. Companies House handles incorporation and director registration, which is the same information most banks check at application. HMRC publishes the list of Making Tax Digital compatible software, so you can confirm the integration before signing up. Scottish and Northern Irish banknotes are not legal tender anywhere in the UK, and some English self-service machines still reject them, so deposit those over a counter rather than into a machine.
Making the move
Applications take minutes, but approval can take days when a business is new or an address history has gaps. Have your Companies House number, photo ID and three years of address history ready; Lloyds asks for month-by-month moving dates, and a missing month stalls the whole file.
Real switching is simpler than it used to be. The Current Account Switch Service moves Direct Debits, standing orders and payees, and redirects incoming payments for a set period. Monzo publishes a customer case of Matt Navarra, a social media consultant in Wales, who moved his account inside the app. Sara and Sean McArdle, who run a pub and brewery business in Nottinghamshire, use the same account for day-to-day takings. Neither of those stories is unusual now.
Open one account, run it for a full quarter, then judge it on how often you had to open a spreadsheet rather than the app. Two providers is a sensible arrangement for most small firms: a main online business bank account for takings and payroll, plus a payments specialist for foreign customers.
Diary the end of any introductory period the week you open the account. More owners lose money to a forgotten fee holiday than to a badly chosen provider. Start with the cash and payment counts this week, and the shortlist tends to write itself once those figures are on paper.
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