Business bank accounts for sole traders: what to check before you open one
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
As a sole trader, you and your business are legally the same person. That makes banking simpler — you can usually open an account in minutes with just your personal ID — but it also means a few rules work differently, including FSCS protection.
Our pick for a sole trader who wants no monthly fee and UK bank protection: Starling or Mettle. Our pick if you want tax help built in: Mettle, which includes FreeAgent if you make one transaction a month.
Sole trader account options compared
| Provider | Monthly fee | Tax and software help | Protection |
|---|---|---|---|
| Starling | No monthly fee | Xero, QuickBooks and FreeAgent feeds via Starling Marketplace | Bank — FSCS protected |
| Mettle (NatWest) | No monthly fee (optional Mettle+ add-on £4 a month) | FreeAgent included if you make one transaction a month | Accounts provided by NatWest — FSCS protected; older e-money accounts aren’t covered |
| Monzo Business | Lite: free. Pro: £9 a month (first month free). Team: from £25 a month | Xero, QuickBooks, FreeAgent and Sage on Pro and Team | Bank — FSCS protected |
| Tide | Free plan: no plan fee. Smart £12.49, Pro £27.49, Max £69.99 a month | Direct Xero feed (updates every 24 hours) | Tide isn’t a bank. Most accounts are held with ClearBank (FSCS); some older e-money accounts aren’t FSCS covered |
| Countingup | 3-month free trial, then £5, £12 or £20 a month depending on monthly deposits | Built-in bookkeeping and accountant access | New accounts held with Griffin — FSCS protected; older e-money accounts are on old pricing |
| ANNA | Free plan £0 (first £1,000 incoming a month free, then 0.95%). Business plan £22.90 a month + VAT | Syncs with software such as Xero | E-money — funds in the main ANNA account are safeguarded, not FSCS protected |
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
- New sole traders keeping business money apart from personal spending
- Side-hustlers whose bank doesn’t allow business use of a personal account
- Tradespeople and freelancers who want tax pots and invoicing in one app
- Sole traders thinking about moving away from a fee-charging account
Who should skip it
These are general points to weigh up, not advice. You may want to look elsewhere if:
- You’re about to incorporate — a limited company needs its own account in the company’s name
- You take a lot of cash and need branch counters for deposits
- Your annual income is tiny and your bank allows occasional business use of your personal account
- You need overdrafts or lending straight away and haven’t traded yet
Full explanation
What a sole trader account is for
A separate account keeps your business income and costs in one place, which makes your Self Assessment return quicker and easier to evidence. It also helps if HMRC ever asks questions, because you won’t have to untangle personal spending from business spending.
What you’ll usually need
Most app-led providers ask for photo ID, a selfie check and a few details about what you do and expect to earn. You don’t need to be registered at Companies House. If you’ve only just started, you may still need to have registered for Self Assessment with HMRC — see business tax and HMRC basics.
Free versus paid
Free accounts suit most sole traders with straightforward income. Paid plans add things like extra transfer allowances, invoicing or accounting software. Before upgrading, add up what the extras would cost you elsewhere — Mettle, for instance, includes FreeAgent, which it says saves at least £150 a year.
If you’re weighing up whether to stay a sole trader at all, read Sole trader vs limited company. For quick answers, see our Sole trader banking FAQs.
The catch
FSCS works per person for sole traders. Because a sole trader isn’t a separate legal entity, your personal and business deposits at the same bank count towards one £120,000 limit (source: FSCS). If you keep large balances, spreading them across different banking licences matters.
Cash costs more than you think. Starling charges 0.7% (minimum £3) to pay in cash at the Post Office, and its sole trader account has a cash deposit limit of £5,000 a day and £100,000 a year.
Some providers exclude you. Not every business product accepts sole traders — Capital on Tap’s credit card, for example, is for limited companies, LLPs and PLCs only.
Not sure you need one at all?
Check a provider’s current sole trader terms:
These go straight to each provider’s own website. They aren’t referral links and we don’t earn from them.
FAQs
Can a sole trader open a business account with just personal ID?
Usually, yes. App-led providers typically ask for photo ID and a selfie check. You don’t need Companies House registration as a sole trader.
Is my business money protected separately from my personal savings?
No. For a sole trader, personal and business deposits at the same bank share one FSCS limit of £120,000.
Which accounts include accounting software?
Mettle includes FreeAgent if you make one transaction a month. Countingup has built-in bookkeeping. Monzo Business Pro and Team link to Xero, QuickBooks, FreeAgent and Sage.
Will opening a business account affect my credit score?
Some providers run a credit check when you apply. Ask the provider what type of check it uses before you apply.
Can I use my business account for personal spending?
Keep them separate. Mixing spending makes your records harder to keep and may breach the account terms.
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