Best business bank account for sole traders UK

Do sole traders need a business account?

Not legally. As a sole trader you and your business are the same legal person, so nothing in law says the money has to sit in a separate account. What HMRC does require is that you keep records of your business income and expenses, and the guidance on what records to keep if you’re self-employed expects you to be able to separate them from personal spending.

In practice most sole traders open a business account anyway, for three reasons. Bookkeeping is far easier when every transaction in an account belongs to the business. Many personal account terms say the account is for personal use, so running regular trading through one can put it at risk. And a business account gives you tools a personal account does not, such as invoicing, tax pots and accounting software links.

If you earn very little, you may not need to register at all: GOV.UK’s trading allowance guidance covers income of £1,000 or less a year. Our guide to whether you need a business bank account as a sole trader covers the rules in full.

Best picks for sole traders

These are the accounts we would shortlist for a UK sole trader in October 2026, with the case for each. Figures come from each provider’s own pages and are listed in the sources at the foot of this page.

Monzo Business: best for automatic tax set-aside

Monzo Business Lite is free and covers free UK transfers, a card, Tap to Pay, savings pots and free Making Tax Digital for Income Tax software, built on Sage. Pro costs £9 a month (first month free) and adds Tax Pots (a percentage of every incoming payment, moved automatically), plus invoicing and accounting sync. It is a full bank, so deposits are FSCS-protected. Sole traders can have a team of 3 (you plus 2). More detail is further down this page.

Starling: best free account if you handle some cash or cheques

The Starling business account has a monthly fee of £0 for sole traders and limited companies, free UK transfers and free invoicing. Its tax tools include spaces for tax, free MTD for Income Tax tool and Corporation Tax estimate. Cash goes in at the Post Office at 0.7% (minimum £3), and cheques are free to pay in by post or app. If you want the built-in bookkeeping, there is an optional upgrade: Accounting Plus £7 a month until April 2027, then £14 (optional).

Tide: best for a big feature menu, if you upgrade

Tide has a Free plan, but UK transfers are rationed (5 a month on Free, then 20p each), card spending abroad costs 2.75% on Free; 0% on paid plans, and invoicing is limited to 3 invoices a month (unlimited on Max). Paid plans (Smart £12.49, Pro £27.49, Max £69.99 a month) remove most of those limits. Tide is not itself a bank: accounts are provided by ClearBank, so deposits are FSCS-protected through ClearBank. Its referral offer is also bigger than most: £100 for the referee after £500 card spend in 90 days.

Mettle: best if you want FreeAgent included

Mettle is run by NatWest and costs £0 a month. Its standout feature is FreeAgent included (needs one transaction a month), which on its own would otherwise cost a sole trader a monthly subscription. It has a tax pot and estimate, and free invoicing. The trade-offs: no overdraft, cash deposits cost £2.75 per deposit at the Post Office, and outbound international payments are not yet offered.

Countingup: banking and bookkeeping in one app

Countingup combines the account with bookkeeping, receipt capture and tax estimates. It costs £5 a month after a 3-month free trial, rising with the money you pay in, and includes 3 free a month, then 27p UK transfers. Note that its current referral offer is for limited companies only, so a sole trader joining would not get it.

Revolut and ANNA

Revolut sends freelancers and sole traders to Revolut Pro, a business profile inside its personal app, rather than to Revolut Business. It is useful for card payments and foreign currency, but it is e-money, not a bank deposit. ANNA has a free plan with a lot of admin help, including free MTD filing, but the main account is also e-money, and on the free plan incoming payments above a monthly allowance are charged a percentage.

Side-by-side comparison

The figures that matter most to a sole trader, on each provider’s entry plan unless stated.

Tide’s cash figures are for the Free plan; paid plans are cheaper. Countingup’s cash fee is not published on its pricing page. For a fuller head-to-head, see Monzo Business vs Starling and Monzo Business vs Tide.

Monzo Business for sole traders

Monzo Business is open to sole traders who meet three rules: 16 or over; UK based and UK tax resident only; and earning mainly from trading, not investments. You do not need a Monzo personal account. The plans that matter for most sole traders:

Tax Pots are the reason most sole traders pay for Pro. You set a percentage, and every time a payment lands Monzo moves that share into a separate pot, so the money for your Self Assessment bill is never in your spending balance. You can have up to three, for example Income Tax, National Insurance and a VAT pot if you are registered. Direct Debits can be paid straight from a Tax Pot. We use Tax Pots in our own company account and they are one of the features we would least like to give up. Our Monzo Business Tax Pots guide explains the set-up, and the tax set-aside calculator suggests a percentage.

Savings pay up to 3.25% AER (variable), but the rate depends on your plan, and Monzo’s own pages show different figures, so check the rate in the app before you move money.

Is Pro worth it? If you would otherwise move tax money by hand each month and you send invoices, probably. If you are paid a handful of times a year, Lite and a manual transfer may be enough. Our page on whether Monzo Business Pro is worth it does the sums.

Making Tax Digital for Income Tax

Making Tax Digital for Income Tax changes how many sole traders report to HMRC. Instead of one annual return, you keep digital records and send quarterly updates using compatible software. According to GOV.UK’s Making Tax Digital guidance, it applies to sole traders and landlords with qualifying income over £50,000 from 6 April 2026, over £30,000 from 6 April 2027 and over £20,000 from 6 April 2028. Qualifying income is your total turnover from self-employment and property, before expenses.

This is where your choice of bank account starts to matter for tax. Monzo Business includes free Making Tax Digital for Income Tax software, built on Sage, on every plan including Lite, so the transactions it already has can feed your quarterly updates. It is for sole traders and landlords only; it does not file VAT or Corporation Tax. Starling, Tide and ANNA also advertise free MTD tools, and Mettle includes FreeAgent, which is MTD-compatible.

If your income is below the thresholds, nothing changes yet: you still file a Self Assessment return, with the online deadline for the 2025 to 2026 tax year on 31 January 2027, as set out on GOV.UK’s deadlines page. Our Making Tax Digital for Income Tax guide covers the rules, and Monzo Business and Making Tax Digital covers the built-in tool.

Overdrafts and loans

Sole traders are better served by Monzo’s lending than limited companies are, because Monzo lends to sole traders itself. According to Monzo’s lending pages:

Monzo says lending is subject to status and eligibility, and you apply in the app once the account is open. An overdraft is expensive borrowing at those rates, so treat it as a buffer for timing gaps rather than working capital. Mettle does not offer an overdraft at all, and Tide offers loans and finance through its own marketplace. The full detail is on Monzo Business overdrafts and loans.

How to choose

• You want tax handled automatically: Monzo Business Pro, for Tax Pots and the free MTD tool.
• You want everything free and occasionally pay in cheques: Starling.
• You would otherwise pay for accounting software: Mettle, for FreeAgent.
• You take a lot of cash: compare cash fees carefully; a high-street bank may be cheaper. Our free accounts page lists the cash charges side by side.
• You are paid in euros or dollars: pair a UK account with a multi-currency one such as Wise.

If Monzo Business suits you, here is how the referral works. It is only for people who have never opened a Monzo account before, and the four steps must be completed within 30 days.