Compare sole trader bank accounts

July 2021

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.

For a personalised banking report, and access to tailored funding and savings opportunities for your business, simply register here.

Barclays Start-up business account

Account fee

Free for 12 months, then £6

Opening time

Within 3 weeks

Bank transfers

From £0.35

Invoicing

done

Overdrafts

done
star

12 months FREE banking

Anna Money business account

Account fee

Free

Opening time

10 mins

Bank transfers

Free

Invoicing

done

Overdrafts

close

Calculates taxes & VAT for you automatically

GoSolo business bank account

Account fee

Free

Opening time

10 mins

Bank transfers

£0.20

Invoicing

done

Overdrafts

close

New Limited company registration

Revolut Free account

Account fee

Free

Opening time

3.5 days

Bank transfers

£0.20

Invoicing

close

Overdrafts

close
star

Hold and exchange 28 currencies at the real (interbank) rate

Cashplus business bank account

Account fee

No monthly or annual fees, just an initial £9.95 card fee

Opening time

4 mins

Bank transfers

First 3 free and then £0.99

Invoicing

close

Overdrafts

done
star

Integrated with all accounting packages

Tide Business Current Account

Account fee

Free

Opening time

1 day

Bank transfers

£0.20

Invoicing

done

Overdrafts

close
star

Free tools for accounting and invoicing

Lloyds Bank Start up

Account fee

FREE for 12 months, then £7 per month

Opening time

Within 4 weeks

Bank transfers

Free

Invoicing

close

Overdrafts

done
star

Interbank Agency Agreements

Bank of Scotland Start up

Account fee

FREE for 12 months, then £7 per month

Opening time

Within 4 weeks

Bank transfers

Free

Invoicing

close

Overdrafts

done
star

Interbank Agency Agreements

Revolut Grow account

Account fee

£25 per month

Opening time

3.5 days

Bank transfers

First 100 free then £0.20

Invoicing

close

Overdrafts

close
star

Ecommerce: accept payments on your checkout page and with platform plugins

Barclays Switcher business account

Account Fee

From £6

Opening time

Within 3 weeks

Bank transfers

From £0.35

Invoicing

done

Overdrafts

done
star

Multiple tariffs to suit your business

CardOneMoney Business Account

Account fee

FREE for first 3 months then £12.50 per month + an application fee of £55

Opening time

4 hours

Bank transfers

£0.30

Invoicing

close

Overdrafts

close
star

No credit checks

Fair Everywhere business account

Account fee

£12.50 + £55 application fee

Opening time

1 day

Bank transfers

£0.30

Invoicing

close

Overdrafts

close
star

Great currency rates

The listings below are for information purposes only. These accounts are not currently open for applications.

ZBank of Scotland Switcher

Account fee

Free for 12 months then £7 after

Opening time

Lloyds Bank has temporarily stopped accepting applications from customers looking to switch their business.

Bank transfers

£0

Invoicing

close

Overdrafts

done
star

Interbank Agency Agreements

ZLloyds Bank Switcher

Account fee

Free for 12 months then £7 after

Opening time

Bank of Scotland has temporarily stopped accepting applications from customers looking to switch their business.

Bank transfers

£0

Invoicing

close

Overdrafts

done
star

Interbank Agency Agreements

* Swoop’s service features a selection of providers from whom we receive commission.

For a personalised banking and saving report tailored to your business, simply register and securely integrate your bank account through our Open Banking technology.

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 SME business bank for customer service in the UK – 2020 survey

In August 2020 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 16,800 SME bank account customers between July 2019 and June 2020. 

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

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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