Best business bank accounts for sole traders

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Best business bank accounts for sole traders

You're not legally required to have a separate business bank account as a sole trader - but most accountants recommend it, and for good reason. When your business income and personal spending are mixed together, working out your profit at tax time becomes much harder than it needs to be.

The good news is that several genuinely capable free options exist. Here's a rundown of the main accounts worth considering, based on 2025/26 availability.

We cover the case for a separate account in more detail in our post on whether you need a business bank account as a sole trader.

What to look for

For most sole traders, the key things to consider are:

• Monthly fee - several free options exist, so there's no need to pay for basic banking

• FSCS protection - full UK banks (Starling, Monzo) protect deposits up to £120,000. E-money institutions like Wise and Revolut safeguard funds differently - your money is ring-fenced but not covered by FSCS directly

• Accounting software integration - does it connect to the software you use or plan to use?

• MTD readiness - from April 2026, sole traders over £50,000 gross income need MTD-compatible record keeping. Some accounts include this built in

• International payments - if you invoice overseas clients, a multi-currency account may save you significantly on exchange rates

Starling Bank

Starling is a fully licensed UK bank with no monthly fee and no charges on domestic transfers. You get a UK sort code and account number, a Mastercard debit card, real-time notifications, and spending categories. Deposits are FSCS protected up to £120,000.

It integrates with Xero, QuickBooks and FreeAgent, making it a solid choice if you already use one of those for your accounts. Receipt capture and invoicing are available as a paid add-on (the Business Toolkit, £7/month) if you want them built in.

Starling doesn't have a Sage bank feed, which is worth knowing if your accountant uses Sage. Cash deposits are accepted but come with a fee.

• Monthly fee: free

• FSCS protected: yes, up to £120,000

• MTD compatible: connects to MTD-ready accounting software

• Best for: UK-based sole traders who want free, reliable banking with strong accounting integrations

Monzo Business

Monzo Business offers a free Lite tier with standard UK banking features. The Pro tier at £9/month adds tax pots - a feature that automatically sets aside a percentage of incoming payments for your tax bill - plus invoicing and deeper accounting integrations.

Monzo is a fully licensed UK bank, so deposits are FSCS protected up to £120,000. It integrates with Xero, QuickBooks, FreeAgent and Sage on the Pro plan.

The tax pot feature is genuinely useful for sole traders who struggle to set aside money for Self Assessment - it does the discipline for you automatically.

• Monthly fee: free (Lite) / £9/month (Pro)

• FSCS protected: yes, up to £120,000

• MTD compatible: built-in MTD tools on all tiers

• Best for: sole traders who want tax pots to help manage their Self Assessment bill

Tide

Tide is built specifically for sole traders and small businesses. The free plan includes invoicing built directly into the banking app - a genuine differentiator, since most other accounts leave invoicing to separate software (note that the free plan charges 20p per bank transfer, which can add up if you make frequent payments - worth factoring in if you pay multiple suppliers regularly). It also integrates with Sage, Xero, QuickBooks and FreeAgent.

Tide is provided through ClearBank, a fully licensed UK bank, so your deposits are FSCS protected up to £120,000. The free plan includes some transaction fees on transfers, so it's worth checking the current fee schedule if you make frequent payments.

• Monthly fee: free basic / paid tiers from £9.99/month

• FSCS protected: yes, up to £120,000 (via ClearBank)

• MTD compatible: yes

• Best for: sole traders who want invoicing built into their bank account, or who use Sage

Revolut Business

Revolut Business offers multi-currency banking with competitive exchange rates, making it a strong option if you deal with international clients or make overseas payments. The free Basic plan has limited features; the paid plans (from around £10/month) unlock more transfers and integrations.

Revolut is an e-money institution rather than a fully licensed bank, which means your money is safeguarded but not covered by FSCS in the same way as Starling or Monzo. It's worth understanding this distinction before making it your only account.

• Monthly fee: free basic / paid tiers

• FSCS protected: no (e-money institution - funds safeguarded)

• MTD compatible: integrates with Xero and QuickBooks

• Best for: sole traders with international clients who need multi-currency banking

Wise Business

Wise Business isn't a bank account in the traditional sense - it's a multi-currency account that lets you hold, send and receive money in over 40 currencies at the mid-market exchange rate. If you invoice clients in euros, dollars or other currencies, Wise can save you significantly compared to what a standard bank charges for currency conversion.

There's a one-off setup fee of £50, then pay-as-you-go fees on transfers. Wise is an e-money institution, so funds are safeguarded but not FSCS protected. Most sole traders who use Wise keep it alongside a main UK bank account rather than as their only account.

You can read our full review of Wise Business for a more detailed breakdown.

• Monthly fee: £50 one-off setup, then pay-as-you-go

• FSCS protected: no (e-money institution - funds safeguarded)

• MTD compatible: no

• Best for: sole traders with international clients or multi-currency income

Which one is right for you?

If you're UK-based with straightforward finances and want to pay nothing, Starling or Monzo Lite are both solid starting points. If you want invoicing built into your account, Tide is worth a look. If you deal with international clients, Wise Business is hard to beat on exchange rates.

You can see the full listings for each of these in our Business Banking directory.

Directory

Tax Filing Software

Accounting & Bookkeeping

Business Banking

Invoicing

Expense & Mileage Tracking

Receipt Capture

MTD Software

Time Tracking

Spreadsheet & Planning Tools