Business bank accounts for sole traders in the UK

What to read on a provider's own pages

This section does not name a bank, a building society, or an app. It does not say which account is suitable. The fee and the feature list are on the provider's own pages, and they change. Read those pages for the account in front of you.

Business.gov.uk describes what a business account is for: finding the business transactions, keeping records for tax, and, where the account offers them, taking card payments. Accounts differ. The lines to read are:

• The fees the provider publishes. Look for a monthly fee, a charge for paying in cash, and a charge for a transfer. This page does not quote a fee. Those numbers belong to the provider.
• Whether the account can send an invoice or take a card payment, or whether you will keep doing that in the tool you already use. The words on an invoice are a separate job, covered in the invoice guide.
• Whether you can store a photo of a receipt against a payment. HMRC still expects a record you can show. A photo does not turn a missing figure into an allowable cost.
• Whether the account connects to accounting software you already use. That connection is a feature. The records page does not require it.
• Whether deposits are covered by the Financial Services Compensation Scheme, and up to what limit. The next section is that limit.

Business.gov.uk says you can typically open a business account if you are 18 or over, a UK resident, and a sole trader, a director, or a partner. "Typically" is the word on the page. The provider sets the test it actually uses. A business that has not started trading may have to apply for a start-up account. Some providers only offer an account after a year of trading. If the business has no credit rating, the bank may run a personal credit check.

The same page describes the Current Account Switch Service for a business current account where annual turnover is under £6.5 million, there are fewer than 50 employees, and both providers are in the scheme. That is a description of the service. It is not a reason to move.

FSCS cover

The Financial Services Compensation Scheme (opens in a new tab) says that if a UK-authorised bank, building society, or credit union failed after 30 November 2025, compensation for eligible deposits is up to £120,000 per eligible person, per bank, building society, or credit union. The limit rose to £120,000 on 1 December 2025. The firm has to be authorised by the Prudential Regulation Authority. You can check a firm on the Financial Services Register (opens in a new tab).

On that FSCS page, a sole trader is not a separate legal entity. The example it gives is Mr Smith trading as Smith Motors. A personal account and a business account at the same bank are covered up to £120,000 in total, not £120,000 each. A limited company is a separate legal entity, and that page says the company can be a separate claim. Where banks share one licence, the £120,000 applies to the total you hold across them. A joint account is covered up to £120,000 per eligible person, and the shared-licence rule still applies.

The same page protects some qualifying temporary high balances up to £1.4 million for six months. The conditions for that are on the FSCS page.

The £120,000 figure is the one for a PRA-authorised bank, building society, or credit union. It does not, by itself, tell you that every firm which holds money is covered in that way. If the firm is a different kind of business, read what FSCS and the firm say about that firm before you treat the limit as applying.

Registering as a sole trader is a separate job from opening an account. The steps, the 5 October date, and the UTR are in the registration guide. The return date is in the Self Assessment guide.

Sort a statement

Sort these bank lines into two lists: business and personal. UK English. Use pounds. Do not invent lines, amounts, or dates. If I have not said whether a line is business, write NOT MARKED. Do not tell me to open, close, or switch an account. Do not name a bank.

Lines:
[paste only lines you are happy to share. Cover the account number and the sort code before you paste.]

Do not paste a full account number, a sort code, a card number, or a password. Read the two lists against the statement before anything goes near the return.