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Opening a business bank account in the UK: how-to & what you need

Business bank accounts can be really useful when it comes to managing your business’s day-to-day financial transactions. Expanding on this, many also offer specialist services that can help when it comes to issuing invoices and carrying out accountancy tasks. 

Here, we explain all you need to know about opening a business bank account in the UK. 

Do I have to open a business bank account?

Whether you need to open a business bank account will depend on the type of business you run and whether it’s legally separate from you:

  • You’ll be required to open a business bank account: if you’ve set up your business as a limited company in the UK and registered it with Companies House
  • You won’t be required to open a business bank account: if you’re a freelancer, contractor or gig worker and you are a sole trader as this means your business isn’t legally separate from you. 

However, even if you’re not legally required to have a business bank account, it can still be well worth opening one, particularly as it can make juggling your business’s income and expenditure with your own that much easier. 

Can I use a current account for business?

If the type of business you run means you do not need to open a business bank account, there’s not much stopping you from using your personal current account for business. 

However, there are several advantages to opening a business bank account, as we’ve outlined below:

  • Some banks may specify personal current accounts are for personal use only and may threaten to close your account if they see a large number of business-related transactions
  • Keeping your business income and expenses separate can make it easier when you come to do your tax return
  • Having a dedicated bank account can make your business appear more professional as clients can make payments into an account under your business name, rather than your own name
  • A business bank account will help you to build a credit rating for your business which will be beneficial if you later need to apply for a business loan or credit card.

What documents do I need to open a business bank account in the UK?

To open a business bank account, you’ll usually need to provide the following documents:

  • Proof of ID: such as a passport or driving licence. All named company directors will need to provide this
  • Proof of address: such as a utility bill, recent bank statement or mortgage statement

You may also need to provide:

  • Your full business address and contact details
  • Details of your company’s registration at Companies House if you’re a limited company
  • Tax and VAT registration details
  • Estimated annual turnover

How do I open a business bank account in the UK?

To open a business bank account, it’s best to research your options using an online comparison tool, and then, once you’ve found the appropriate account, simply click through to fill in the online application form.  

Can I open a business bank account online?

Most business bank accounts will allow you to start the application process online and if you choose a digital, app-based provider, the whole process can be completed this way, making it quick and easy. As part of your application, you will be asked to upload photos of your ID and record a short selfie video for identification purposes.

What’s the best bank to open a business account with?

The right choice for you will depend on the type of business you run, how you plan to use the account, and your personal circumstances. 

The best way to find the most suitable business bank account is to shop around using our business bank account comparison tool. This will enable you to easily compare your options and you can even select which bank account features are most important to you, such as the number of branches, foreign exchange, invoicing, overdrafts and so on. 

How long does it take to open a business bank account in the UK?

Many business bank accounts allow you to complete your application online or via the provider’s app in as little as 15 minutes. The approval time will then depend on the business circumstances.

If you choose a digital bank, you’ll often be able to open your account on the same day, or within a few days if not. It’s worth noting that at the moment, many of the high street banks are taking longer than usual to process business bank account applications, so you may find the process takes a number of weeks.

Does it cost to open a business bank account?

Depending on the business bank account you choose, you may have to pay a monthly or annual fee. However, the good news is that a number of business bank accounts won’t charge a fee at all, while others will waive fees for the first 12 or 18 months. Just make sure you check what the fee will be once this period is over.

Can I open a business bank account if I have bad credit?

Opening a business bank account with bad credit can be more difficult, but it is still possible. When you apply for a business bank account, many banks will run a search on your credit history to see how creditworthy you are. If you have no credit history or your credit score is poor, your application is likely to be rejected. 

Fortunately, there are a number of app-based providers that won’t require a credit check as part of the application process, such as Anna and Cashplus, and these can therefore be a good option for those with poor credit. These business accounts work in the same way as regular business accounts, but you will usually find you won’t be offered an overdraft as this is a form of credit. 

Do I need to be a UK resident to open a business bank account?

You don’t necessarily have to live in the UK to be able to open a business bank account. However, it’s sensible to acquire UK residency before applying for one as the majority of banks won’t accept your application unless you have UK residency. This is due to concerns over fraud and the additional administration costs banks will incur. 

Is money in my business bank account covered by the FSCS?

The Financial Services Compensation Scheme (FSCS) protects money held in bank current accounts and savings accounts up to £85,000 per person, per financial institution. This means that should your bank collapse, you’ll get your money back.

However, because providers such as Revolut and Anna are not banks, funds held in these accounts won’t be covered under the FSCS. Instead, your funds will be protected through safeguarding rules under the Electronic Money Regulations 2011.

Start exploring your options today by visiting Swoop’s Business Current Account Comparison Table. Calculate your annual savings and select the bank account features most important to you so you can discover the right option for your business. 

Rachel Wait

Written by

Rachel Wait

Rachel has been writing about finance and consumer affairs for over a decade, helping people to get to grips with their finances and cut through the jargon. She's written for a range of websites and national newspapers including MoneySuperMarket, Money to the Masses, Forbes UK, and Mail on Sunday. Rachel has covered almost every financial topic, from car insurance and credit cards, to business bank accounts and mortgages.

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