Compare sole trader bank accounts

May 2025

Not sure if it’s worth opening a separate bank account as a sole trader?

Whilst sole trader’s aren’t required to separate their business and personal finances, there are several advantages. Compare your best options with our simple tool below.

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If you’re a sole trader in the UK, opening a business bank account can help you manage your everyday business financial transactions, as well as benefit from specialist services and tools to help you run your business more smoothly.

We explain how sole trader bank accounts work and how to find the best solution for your business.

What is a sole trader?

A sole trader is someone who is self-employed and runs their own business as an individual. A sole trader has complete control over their business and can keep all of the business’s profits after tax has been paid. However, unlike owners of a limited company, sole traders are also personally responsible for any losses the business makes.

Sole traders can include some freelancers and contractors, as well as certain tradesmen such as plumbers, plasterers and electricians. Although sole traders operate the business on their own – and many choose to work alone too – sole traders can also hire staff.

What are sole trader bank accounts?

Sole trader bank accounts are simply regular business bank accounts. They work in a similar way to personal bank accounts and are offered by many high street and challenger banks. Sole trader business accounts can offer a variety of free tools and services such as accounting software or invoicing support.

Do I need a separate bank account as a sole trader?

Businesses that have been set up as a limited company in the UK and are registered with Companies House are legally required to open a business bank account.

In comparison, there is no legal obligation for sole traders to have a separate bank account which means they can use their personal bank account for business needs if preferred.

However, it’s worth noting that some banks may specify your personal current account needs to be for personal use only and could threaten to close your account if they spot a large number of business-related transactions.

What are the benefits of setting up a separate bank account?

There are a number of benefits to opening a separate bank account if you’re a sole trader. For a start, keeping your business’s income and expenditure separate from your own can make it much easier when it comes to completing your tax return.

Having a separate account can also make it easier to monitor the cashflow of your business, allowing you to easily see when invoices have been paid or when you have paid suppliers. A dedicated bank account also makes your business appear more professional to clients as invoice payments can be made into an account under your business name rather than your own name.

Additionally, a business bank account can help you build a credit rating for your business which will be beneficial if you later need to apply for a business credit card or loan.

What do I need to open a sole trader bank account?

To open a sole trader bank account, you’ll usually be asked to provide proof of ID, such as a passport or driving licence, as well as proof of address, such as a utility bill, recent bank statement or mortgage statement. If you’re applying via a digital bank you may be asked to upload photos of your ID and record a short selfie video for identification purposes.

You may also need to provide:

Your full business address and contact details
Tax and VAT registration details
Estimated annual turnover.

Can I get a sole trader bank account with no fees?

Yes, there are a number of sole trader bank accounts that do not charge any monthly or annual fees. Others might waive fees for the first 12 to 18 months, so make sure you check the small print before applying.

Can I open a sole trader bank account with bad credit?

It is possible to open a sole trader bank account if you have poor credit, but your options are likely to be more limited. Many banks will run a search on your credit history when you apply and if your credit score is low, you may be turned away.

Some app-based providers, however – such as Anna and Cashplus – do not run a credit check as part of the application process and can therefore be worth considering if you have bad 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.

What is the best bank account for a sole trader in the UK?

The best bank account for a sole trader will depend on your personal circumstances, the type of business you run and how you plan to use the account.

To ensure you’re getting the right deal, it’s important to shop around using our business bank account comparison tool and select the features most important to you – whether that’s the number of branches, an overdraft, foreign exchange and so on.

How do I open a sole trader bank account?

Once you’ve compared your options and found a sole trader bank account you’re happy with, simply click through to complete the online application form. If you’ve chosen a digital, app-based provider, opening your account should be quick and easy to do online and you can often be up and running the same day.

Best UK business bank for customer service – 2024 survey

In August 2024 the BVA BDRC published the findings from its Business Banking Service Quality survey. Undertaken as part of a regulatory requirement and published at the request of the providers and the Competition and Markets Authority, the study surveyed 18,000 SME bank account customers between July 2023 and June 2024.

Each customer was asked how likely they would be to recommend to other SMEs –

Their provider?
Their provider’s online and mobile bank services?
Services in-branch and in business centres?
Their provider’s SME overdraft and loan services?
Their provider’s relationship/account management services?

The results show the proportion of customers of each provider, among those who took part in the survey, who said they were ‘extremely likely’ or ‘very likely’ to recommend each service. A detailed breakdown for each category can be seen in the table below.

Source: BVA BDRC

Ranking	Provider	Score
1	Monzo	85%
2	Starling Bank	83%
3	Tide	75%
3	Handelsbanken	75%
5	Zempler Bank	69%
6	Metro Bank	65%
7	Lloyds Bank	61%
7	Santander	61%
9	NatWest	57%
10	Money	56%
11	Bank of Scotland	55%
11	TSB	55%
13	Royal Bank of Scotland	53%
14	Barclays	50%
14	The Co-operative Bank	50%
16	HSBC UK	48%

Ranking	Provider	Score
1	Monzo	88%
2	Starling Bank	87%
3	Tide	78%
4	Zempler Bank	76%
5	Lloyds Bank	70%
6	NatWest	68%
6	Metro Bank	68%
8	Royal Bank of Scotland of Scotland	67%
8	Bank of Scotland	67%
10	Santander	64%
11	Barclays	63%
12	TSB	61%
12	Money	61%
14	HSBC UK	59%
15	Handelsbanken	56%
16	The Co-operative Bank	39%

Ranking	Provider	Score
1	Handelsbanken	68%
2	Zempler Bank	64%
3	Lloyds Bank	58%
4	HSBC UK	56%
5	NatWest	55%
5	Metro Bank	55%
7	Money	54%
7	Santander	54%
9	Royal Bank of Scotland	52%
10	Bank of Scotland	48%
11	Barclays	46%
12	TSB	45%
	*The ranking does not include any brands where the eligible sample size is less than 100 (Starling Bank, tide and TSB are excluded from this table)

Ranking	Provider	Score
1	Handelsbanken	84%
2	Monzo	81%
3	Starling Bank	75%
4	Tide	67%
5	Metro Bank	65%
5	Zempler Bank	65%
7	Lloyds Bank	60%
8	NetWest	56%
9	Bank of Scotland	55%
10	Money	54%
11	Royal Bank of Scotland	52%
11	Santander	52%
13	TSB	51%
14	The Co-operative bank	49%
14	HSBC UK	49%
16	Barclays	47%

Ranking	Provider	Score
1	Metro Bank	72%
2	Handelsbanken	70%
3	Lloyds Bank	59%
4	Bank of Scotland	54%
5	Santander	51%
6	The Co-operative Bank	50%
7	Money	49%
7	TSB	49%
7	Royal Bank of Scotland	49%
10	NatWest	48%
11	Barclays	41%
12	HSBC UK	38%
	*Monzo, Starling Bank and tide are excluded from this measure as do not operate a branch network

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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