Sole trader bank accounts, August 2026
Compare our best UK business accounts for sole traders
Tide Business Bank Account
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- Fast and easy account setup - open an account within minutes which saves time and gets your business up and running quickly
- No monthly fees - only pay for what you need, then upgrade as your business grows
- Free MTD tool included.
- Expense management and invoice tools - you can easily track your business expenses and create invoices in the app for faster invoicing
- Access a competitive savings account - get more for your money by earning up to 4% AER (variable) with the Tide Instant Saver and access funds at any time
| Availability | Limited companies & sole traders |
| Registration | Business registered & trading in UK |
| Max. annual turnover | Unlimited |
| UK Resident |
Tide Business and Savings Account
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- Easy account set up – open both a Tide Business Bank Account and Tide Instant Saver to get £200 cashback (T&Cs apply)
- Make your money work harder – earn up to 4% AER (variable) with no cap on deposits and instant access to your savings
- Only pay for what you need – no monthly fees on your business account
- Manage your money from anywhere – track expenses, create invoices, and oversee finances easily in the Tide app
| Availability | Limited companies & sole traders |
| Max. annual turnover | Unlimited |
| UK Resident |
Virgin Money M Account for Business
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- No monthly fees – manage your business finances without any hidden charges, helping you keep banking costs low
- 0.25% cashback on debit card purchases – reward your everyday spending and reinvest savings back into your business
- Seamless integration with QuickBooks, Xero, and Sage – automate accounting tasks and streamline your bookkeeping process
- Compatible with Apple Pay and Google Pay - make contactless payments easily from your phone
| Availability | Limited companies, partnerships & sole traders |
| Max. annual turnover | £1,000,000 |
| UK Resident |
HSBC UK Small Business Banking Account
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- With no monthly account fee, this is a cost-effective option if you’re just starting out or looking to keep overheads low.
- Your money is protected under the Financial Services Compensation Scheme (FSCS), so your funds are covered up to £120,000 if the bank goes out of business – giving you extra peace of mind.
- App, online, phone, Post Office and in-branch account management – giving you flexible, multi-channel access to your money wherever and however you prefer to bank.
- Free standard electronic transfers made through Business Internet Banking on your primary current account – helping you cut costs on everyday business banking while keeping things simple and transparent
| Availability | Limited companies, partnerships & sole traders |
| Max. annual turnover | £6,500,000 |
| UK Resident |
Virgin Money Business Current Account
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- Created for you - this account is for start-ups, sole traders and limited companies with an annual turnover of less than £6.5m
- Integration with Sage, Xero and Quickbooks - helps to streamline accounting and reduces human error, plus there’s automated business spending categorisation
- No fees - 25 months’ fee-free day-to-day banking for start-ups and switchers which helps to reduce costs (excludes CHAPS and international payments)
- Compatible with Apple Pay and Google Pay - make contactless payments easily from your phone
| Availability | Limited companies, partnerships & sole traders |
| Max. annual turnover | £6,500,000 |
| UK Resident |
Tide Business Bank Account (CASS Switch)
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- Switch your account easily with CASS – move payments, Direct Debits, and Standing Orders to Tide with the Current Account Switch Service
- No monthly fees - only pay for what you need, then upgrade as your business grows
- Expense management and invoice tools - you can easily track your business expenses and create invoices in the app for faster invoicing
- Access a competitive savings account - get more for your money by earning up to 4% AER (variable) with the Tide Instant Saver and access funds at any time
| Availability | Limited companies & sole traders |
| Registration | Business registered & trading in UK |
| Max. annual turnover | Unlimited |
| UK Resident |
Monzo Business Lite Account
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- Free UK bank transfers - these fees can add up quickly, so it helps to keep costs down
- 24/7 customer support - if you have any issues there’s a team ready to help which means you can focus on running your business
- Money management - separate money with Pots, receive payments through a single link and effortless accounting via receipt uploads to support your business
- Unlock interest - earn 1.30% AER (variable) on funds in your Instant Access Pots and interest is paid monthly so you can easily see your money grow
| Availability | Limited companies & sole traders |
| UK Resident |
Starling Bank Business Account
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- Fully online application - apply for an account from your phone, with no branch visits required
- 24/7 UK support – chat to a fully UK-based team anytime via the app or phone.
- No hidden fees – no monthly charges, UK transfer or ATM fees, and clear fees abroad.
- Stay organised – capture receipts, categorise expenses, and separate money into Spaces for overheads or tax.
| Availability | Limited companies, partnerships & sole traders |
| Maximum balance | Unlimited |
| UK Resident |
Barclays Business Account (up to £400k turnover)
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- No monthly account fee for 12 months - save on banking costs during your crucial first year in business. After 12 months, an £8.50 per month fee applies.
- Flexible account management – manage your finances anytime via app, branch, online, or phone.
- FSCS protection up to £120,000 – keep your money safe with financial protection for eligible deposits.
| Availability | Limited companies, partnerships, sole traders & charities |
| Max. annual turnover | £400,000 |
| UK Resident |
Barclays Business Account (£400k - £6.5m turnover)
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- No monthly account fee for 12 months - save on banking costs during your crucial first year in business. After 12 months, an £8.50 per month fee applies.
- Flexible account management – manage your finances anytime via app, branch, online, or phone.
- FSCS protection up to £120,000 – keep your money safe with financial protection for eligible deposits.
| Availability | Limited companies, partnerships, sole traders & charities |
| Min. annual turnover | £400,000 |
| Max. annual turnover | £6,500,000 |
| UK Resident |
Barclays Business Account for Start-Ups
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- No monthly account fee for 12 months – save on banking costs during your crucial first year in business. After 12 months, an £8.50 monthly fee applies.
- Flexible account management – manage your finances anytime via app, branch, online, or phone.
- FSCS protection up to £120,000 – keep your money safe with financial protection for eligible deposits.
| Availability | Limited companies, partnerships, sole traders & charities |
| Max. annual turnover | £400,000 |
| UK Resident |
What is a sole trader bank account?
A sole trader bank account is a type of business account designed for self-employed individuals who run their own business. It functions much like a personal current account, but often includes features designed for business needs such as invoicing tools, transaction categorisation and integrations with accounting software.
Although some who are self-employed can manage with a personal bank account, opening a dedicated business account can make financial management easier by improving tax efficiency and presenting a more professional image to clients and suppliers.
Do I need a business account as a sole trader in the UK?
There’s no legal requirement for sole traders to open a separate business bank account in the UK. Unlike limited companies, sole traders and their businesses are considered the same legal entity for tax purposes, so you can use a personal bank account for business transactions.
However, a dedicated business account can be highly beneficial, especially as Making Tax Digital (MTD) expands to more taxpayers from April 2026. Business accounts can help you manage finances more efficiently, stay professional, and access tools that support growth.
How a business account can help
Easier financial management - Separating personal and business finances simplifies tracking income and expenses, making self-assessment tax returns and MTD updates easier.
Professionalism - Clients and suppliers see payments and invoices coming from a business account, which can enhance credibility.
Business banking features - Many accounts include invoicing tools, expense tracking, and integrations with accounting software, which can be helpful as your business grows.
Access to business credit - Banks often require a business account to apply for loans or credit cards.
Deposit protection
Eligible deposits are protected under the Financial Services Compensation Scheme (FSCS), currently up to £120,000 per eligible person, per authorised bank, giving you added peace of mind.
Business bank accounts with Making Tax Digital tools
With Making Tax Digital (MTD) being rolled out to more sole traders, many business bank accounts now include tools to help you keep digital records and stay on top of your tax obligations.
Depending on the provider, these features can include automatic expense categorisation, receipt capture, invoicing, tax estimates and integrations with accounting software. Used well, they can reduce admin and make it easier to monitor your finances throughout the year instead of rushing to prepare everything before the tax deadline.
However, not all built-in tools will be appropriate for every sole trader. Features vary between providers, so it's worth checking that any software included with your account is compatible with HMRC's Making Tax Digital requirements and gives you the tools you need to manage your business finances.
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The benefits of a business bank account
The biggest advantage of a business bank account is that it keeps your personal and business finances separate. But that’s just the start.
Many business accounts come with additional features that can save you time, streamline your financial management, and help you stay on top of your cash flow.
Useful features
Accounting software integration: Sync your account with FreeAgent, Xero, or QuickBooks to automatically import transactions and simplify bookkeeping.
Automated tax savings: Set up rules to put aside a percentage of each transaction for tax, so you're always prepared for HMRC payments.
Invoice tracking tools: Stay on top of payments with automated invoicing features.
Budgeting and expense tracking: Categorise transactions and create budgets to keep your spending in check.
Multi-user access: Grant access to team members or your accountant, making collaboration easier.
Instant UK bank transfers: Send and receive payments instantly within the UK.
24/7 customer support: Many business accounts offer round-the-clock assistance when you need it.
Digital banking
If you're a sole trader looking for a cost-effective banking solution then app-based or digital banks might be the way to go. Many offer business accounts with no monthly fees and a range of innovative features, such as:
Instant payment notifications: Get real-time alerts for every transaction.
Digital receipts: Easily store and organise receipts without the paper clutter.
Spending insights: Tools to help you analyse your business expenses.
Cost-compartmentalisation: Some accounts let you set up virtual ‘pots’ to separate different expenses, such as tax savings or operational costs.
The pros and cons of sole trader bank accounts
If you’re a sole trader, opening a dedicated business bank account comes with several advantages, but there are also some potential drawbacks to consider. Here’s a breakdown of the key pros and cons:
Pros
Shows professionalism and credibility: A business bank account signals to clients and customers that you’re serious about your business, helping to build trust when making and receiving payments.
Keeps business and personal finances separate: Using a personal bank account for business transactions can make bookkeeping more complicated than it needs to be. A separate account ensures clear financial records, helping you track your business’s financial health more easily.
Gives access to features designed for businesses: Many business accounts offer useful tools, such as accounting software integrations, invoicing features, payroll management, and business overdraft facilities.
Simplifies tax management: A dedicated account makes it easier to track income and expenses, ensuring accurate tax returns and, if applicable, keeps you compliant with new Making Tax Digital rules. It can also streamline claiming business expenses and providing clear documentation if HMRC requests any proof of transactions.
Cons
Comes with additional fees: Many business accounts charge monthly or annual fees, as well as transaction and overdraft fees. These costs can add up, particularly for smaller businesses.
May take longer to set up: Unlike personal accounts, business accounts often require extra documentation, such as proof of business activity, which could potentially delay the setup process.
Doesn’t necessarily eliminate financial confusion: Even with a business account, sole traders remain personally liable for business debts. If you're not careful, mixing personal and business transactions can still happen.
Involves extra admin: Managing multiple accounts requires more effort. If your business transactions are minimal, the added administration might not be worth it.
How to choose the right account
Picking the right business bank account depends on your business needs, so consider key criteria such as fees, accessibility, features, and customer support. Once you’ve identified your key requirements, compare different banks to find the best fit. Here’s what to be mindful of:
Fees and charges
Eligibility requirements
Accessibility and convenience
Key features
Customer support and security
“As a sole trader, opening a business bank account might not be your top priority, but separating business and personal finances can make life easier. While some accounts have fees, the benefits - like invoicing tools, expense tracking, and accounting software integrations - can save you valuable time.”
How to open a sole trader bank account
Opening a business bank account as a sole trader is generally a straightforward process, but you need to have the right documents ready and understand the steps involved.
Documentation
Most banks will ask for the following:
Proof of identity: A valid passport or driving licence
Proof of address: A recent utility bill, bank statement, or council tax bill.
Proof of business activity: This could be a tax return, invoices, or a business website to show that you're actively trading.
Business details: Your business name, nature of work, and expected turnover
Some banks may ask for additional documents, so check the specific requirements before applying.
Steps to apply
Opening a bank account is relatively simple, as long as you do things in the right order and have everything to hand.
Compare accounts: Research different banks and digital providers to find the best fit for your needs
Gather your documents: Ensure you have all the necessary paperwork before starting the application
Apply online or in-branch: Most banks allow you to apply online, though some may require a visit to a branch
Verification checks: The bank will review your identity, business details, and financial background
Approval and setup: If approved, you’ll receive your account details and can start using your business bank account
FAQs
A sole trader is a someone who is self-employed and runs their own business as an individual, rather than through a company. They are personally responsible for the business’s debts and profits, meaning there’s no legal distinction between the owner and the business.
This is generally considered to be the simplest business structure in the UK and is commonly used by freelancers, contractors, small business owners, and those running side hustles alongside a full-time job.
Sole trader bank accounts are typically available to an individual who is self-employed and personally responsible for their business’s finances. This includes freelancers, contractors, small business owners, and those with side hustles. Banks may require proof of identity, address, and business activity to open an account, but the eligibility criteria are usually straightforward when compared to opening a limited company bank account.
While having a business bank account isn’t a legal requirement for sole traders, it can make managing finances easier by keeping business and personal transactions separate. This can simplify bookkeeping, tax returns, and overall financial organisation.
You don’t legally need a separate business bank account for Making Tax Digital (MTD). HMRC allows sole traders to use a personal account, but in practice, keeping your business finances separate makes life much easier.
MTD requires you to keep digital records and submit regular updates through accounting software. Mixing personal and business spending can make it harder to track transactions, categorise expenses and file accurate returns, adding time and increasing the risk of errors.
A dedicated business account can help keep everything organised, simplify bookkeeping, and help your software (or accountant) work more efficiently.
It's also worth noting that some providers don’t allow business use on personal accounts under their terms.
The cost of having a business bank account varies by provider. Some may charge nothing - usually for a limited time as an introductory offer - while others may charge up to £100 a month.
It all boils down to the features you need and the offers available. For most sole traders with standard requirements a business bank account should cost no more than £10 a month.
The time required to set up a sole trader bank account varies depending on the provider and their application process. Some online banks offer instant or near-instant setup - sometimes in as little as 10-15 minutes - if you have all the necessary documents to hand. Traditional banks might take a few days or even a few weeks to process your application, but it could well be ready faster than that.
Yes, you can take money out of your business account for personal use as a sole trader. As a sole trader, your business and personal finances aren’t legally separate; once you’ve paid your tax and National Insurance, any funds in your account are essentially yours.
Many sole traders opt for a dedicated business account because it helps with bookkeeping, improves their chances of securing business loans, and clearly separates business transactions from personal ones. However, if you’re well organised, keeping everything in a personal account can also work.
Yes, a sole trader can have their business name on a bank account. Many banks give sole traders the option to open a business bank account under their trading name, though they may still require the account to be legally registered in the sole trader’s personal name.
Having your business name attached to a bank account could help to enhance credibility, and will mean your customers can easily identify the business.
No, you don’t need a business account to take card payments as a sole trader, but it can make managing transactions easier.
It’s worth noting that many payment processors will allow you to link a personal account, though some may require a business account for added security and compliance.
Whether or not you need a business bank account as a sole trader is entirely up to you, but there are certainly benefits to having one. A dedicated account can help to keep personal and business finances separate, making it easier to track expenses and file accurate tax returns.
A business account can also give you access to banking features designed specifically for businesses, such as invoicing tools and overdraft facilities. However, some accounts come with fees, so it's worth thinking carefully about your specific situation and assessing whether the benefits outweigh the costs.
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