Business bank accounts for contractors working through a limited company
Important: This guide provides general information, not personalised financial advice. Financial products, rates and eligibility rules can change, so check the provider’s current terms before applying. You can check a firm’s details on the FCA Register.
Quick answer
Many contractors work through their own limited company, invoicing an agency or client for a day rate. That usually means fewer, larger payments in, a salary and dividends out, and a balance that builds up for Corporation Tax and VAT. The account needs to handle that cleanly and share data with your accountant.
Our pick for a one-director contractor company that wants no monthly fee: Starling or Mettle. Our pick once your company holds £50,000 or more and has traded for a year: compare Allica Bank’s linked savings.
Contractor account options compared
| Provider | Who it suits | Monthly fee | Accounting software |
|---|---|---|---|
| Starling | Sole traders and limited companies; 18+ and UK-based | No monthly fee | Xero, QuickBooks and FreeAgent feeds via Starling Marketplace |
| Mettle (NatWest) | Sole traders and limited companies with up to two owners | No monthly fee (optional Mettle+ add-on £4 a month) | FreeAgent included if you make one transaction a month |
| Monzo Business | Sole traders and limited company directors in the UK | Lite: free. Pro: £9 a month (first month free). Team: from £25 a month | Xero, QuickBooks, FreeAgent and Sage on Pro and Team |
| Allica Bank | Established businesses (12+ months) able to deposit £50,000 or more | £25 a month if your average balance falls below £10,000 (unless you have an Allica loan) | Sage, Xero, QuickBooks and FreeAgent |
| NatWest | Switchers and established businesses; branch access | 2 years’ free everyday banking when you switch using the full Current Account Switch Service (turnover up to £2m) | FreeAgent free with a NatWest business current account |
Figures as of 3 October 2026, taken from each provider’s own website. Fees, plans and eligibility change, so check the provider before applying.
Who it’s for
- IT, engineering and professional contractors with a personal service company
- Contractors paid monthly by an agency against timesheets
- Directors paying themselves a salary and dividends
- Contractors whose accountant wants a live bank feed
Who should skip it
These are general points to weigh up, not advice. You may want to look elsewhere if:
- You work through an umbrella company — your pay goes through PAYE, not your own account
- You’re a sole trader freelancer — see accounts for freelancers
- You need complex lending or multi-currency treasury tools
- You want advice on IR35 status — speak to an accountant or check GOV.UK
Full explanation
Setting aside tax as a company
A simple routine is to move a percentage of each invoice into a separate pot for VAT and another for Corporation Tax. That keeps the main balance closer to what the company can actually spend or pay out. Your accountant can suggest the percentages.
Paying yourself
Salary and dividends are company payments, so they go from the company account to your personal account. Keep dividend payments matched to dividend paperwork. GOV.UK explains how directors can take money out of a limited company — read it alongside our sole trader vs limited company guide.
IR35
IR35 rules decide whether a contractor is taxed like an employee. Your bank account doesn’t change your status, but clear records help if your status is reviewed. Check GOV.UK or speak to an accountant.
For more on company banking, see Business accounts for limited companies, Business accounts with accounting integrations and our Limited company banking FAQs.
The catch
Big balances can exceed protection. Money set aside for Corporation Tax and VAT can push a company balance above the FSCS limit of £120,000 per banking licence.
See also: FSCS in 2026: £120,000 for deposits, £85,000 for investments
Minimum balances can apply. Allica charges £25 a month if your average balance falls below £10,000, unless you have an Allica loan.
Your accountant may have a preferred software. If your bank doesn’t feed into it, reconciliation takes longer.
Check a provider’s current terms for contractor companies:
These go straight to each provider’s own website. They aren’t referral links and we don’t earn from them.
FAQs
Do contractors need a separate business bank account?
If you contract through your own limited company, yes — Business.gov.uk says limited companies must have a business bank account in the company’s name.
What happens if my company balance is above the FSCS limit?
Eligible deposits are protected up to £120,000 per banking licence. Money above that may not be covered, so some companies spread balances.
Can my accountant see my business account?
Many providers offer accounting software feeds or accountant access. Check that your bank links to the software your accountant uses.
Should I use an umbrella company instead?
That depends on your circumstances. Umbrella workers are paid through PAYE and don’t need a company account. Get professional advice.
Is interest paid on contractor company balances?
Some providers offer linked savings. Allica links a savings pot to its business current account. Rates change, so check the provider.
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