Monzo Business savings: rates, instant access pots and the plan boost

What savings rate Monzo Business pays

Short answer: up to 3.25% AER (variable) at best, depending on your plan. Monzo’s features page shows 1.30% AER (variable). The rate you will get is the one in the app.

Monzo Business savings live in an Instant Access Savings Pot, a pot inside your business account that earns interest. Monzo’s savings page says you can “Earn up to 3.25% AER interest (variable)… Interest paid monthly, no minimum deposit.”. Its features page describes the same pot as “earning 1.30% AER interest (variable) paid monthly with no minimum deposit and a maximum £1,000,000 balance”.

Both rates are variable, so Monzo can change them. That is normal for instant access savings, and it is the main thing to remember if you are comparing against a fixed-term deposit elsewhere.

Why Monzo shows two different rates

Monzo’s pages do not agree, and we would rather tell you that than pick the flattering figure. The savings feature page leads with “up to” the higher rate. The general features page quotes the lower rate as the rate on the Instant Access Savings Pot. Monzo’s savings page uses “up to” because the rate depends on the plan you are on.

What Monzo does not do is publish a table of rates by plan. A Monzo community post describes the higher figure as the Team plan rate, which matches the “up to” wording, but that is not an official statement and rates can change. So the honest answer is:

• the best rate Monzo advertises is up to 3.25% AER (variable);
• a lower rate, 1.30% AER (variable), also appears on Monzo’s site;
• which one you get depends on your plan; check the app before you choose a plan for its savings rate.

Plans are free for Lite, £9 a month for Pro and from £25 a month for Team. Our Monzo Business plans compared page sets out what else changes between them.

How the Instant Access Savings Pot works

The savings pot is part of the account, not a separate product you apply for. Monzo lists Instant Access Savings Pots among the features on every plan, including free Lite, alongside the core account, payments, card acceptance, savings pots and 24/7 support.

• Instant access. Monzo says you can access and withdraw any time, with no restrictions. Money moves between the pot and your main balance immediately.
• No minimum deposit. You can start with any amount.
• Interest paid monthly. It lands in the pot each month, so it compounds if you leave it there.
• Scheduled deposits. Monzo lets you schedule regular payments into the pot, for example a fixed amount after each payday or each month end.
• One app. The savings pot sits next to your main balance and any Tax Pots, so you can see spendable cash, tax money and reserves separately at a glance.

Because withdrawals are instant, the savings pot works well as an operating reserve: money the business might need at short notice, but probably will not. It is less suited to money you know you will not touch for a year or more, where a notice or fixed-term account elsewhere may pay more.

Opening a savings pot

In the app, create a new pot and choose the Instant Access Savings option. The rate on offer for your plan is shown before you confirm, and that is the number to trust over anything on a website, including this one. Name it for what it is for, such as “Reserve” or “Equipment”, add a starting amount if you like, and set up a scheduled payment if you want it to grow automatically. You can open it from the web app as well as the phone.

If you hold more than one business with Monzo (up to up to 3 businesses per person), each business account has its own pots. Keep each company’s reserve in that company’s account: moving company money into another business, or into a personal account, has tax and legal consequences.

What Monzo Business savings earns

Roughly, a year’s interest is the balance multiplied by the AER. The table shows both of Monzo’s published rates side by side, assuming the balance and rate stay the same all year. Real interest will differ as rates change and as money moves in and out.

Before tax, and illustrative only. The gap between the two rates is the interesting part. On larger reserves the difference can be more than a plan’s monthly fee: for example, the extra interest on £50,000 at the higher rate rather than the lower is about £975 a year, against the Team plan fee, from £25 a month (£300 a year at the starting price). That is why plan choice and savings rate are worth thinking about together, and why you should confirm the rate for your plan in the app rather than assume it.

Why the savings boost was a reason we chose Team

If you are weighing Team for other reasons too, such as expense cards and payment approvals, our Monzo Business Team plan page goes through what it adds over Pro. For a smaller business, is Monzo Business Pro worth it? runs the numbers on the cheaper paid plan.

FSCS protection on Monzo Business savings

Short answer: eligible deposits are protected up to £120,000 per eligible depositor, and that one limit covers your main balance and all your pots together.

Monzo Business is a bank account with Monzo Bank Limited (FRN 730427), not an e-money account, so eligible deposits are covered by the Financial Services Compensation Scheme. Monzo’s savings page says that if you are a sole trader or a small business, eligible deposits may be protected up to £120,000.

The limit is per depositor per bank, not per pot. A limited company with money in its main balance, three Tax Pots and a savings pot has one limit across all of them. A sole trader is legally the same person as their business, so their business and personal money at the same bank generally share one limit too. If your reserves are well above the limit, spreading them across more than one banking licence is the usual answer.

Our guide to FSCS protection for business accounts covers which businesses are eligible and how the limit works, and is Monzo Business safe? covers Monzo’s regulation more widely.

Tax on Monzo Business savings interest

Limited companies

Interest is company income. HMRC says taxable profits for Corporation Tax include money a company makes from investments, so the interest goes into the company’s profit and is taxed at its Corporation Tax rate. HMRC’s Corporation Tax rates are 19% on profits of £50,000 or less, 25% above £250,000, with marginal relief between.

So a small company earning interest keeps roughly 81% of it after Corporation Tax. If the money then goes to a director as a dividend, it is taxed again personally. None of this makes the savings pot a bad idea; it just means the after-tax return is lower than the headline, and that keeping a reserve in the company versus paying it out is a decision to make with your accountant. Our guide to paying yourself from a limited company has more on that.

Sole traders

A sole trader is not separate from their business, so interest on the business savings pot is personal savings income. HMRC explains on its tax on savings interest page that whether you pay tax depends on how much interest you earn, your other taxable income and your tax-free allowances, and that banks report interest to HMRC after each tax year. Include it when you think about your tax set-aside.

Savings pots vs Tax Pots

These are different things. A Tax Pot fills itself with a percentage of each payment you receive and is on Pro and Team only. The Instant Access Savings Pot is where Monzo describes interest being paid, and is on every plan. Monzo does not say Tax Pots earn interest.

Some companies with a large Corporation Tax balance building up over the year move part of it into the savings pot and back before the bill is due, to earn interest in the meantime. It works, but it is a manual habit. If you do it, write the due date down and move the money back in good time.

How much cash to keep in instant access

There is no single right answer, but a simple way to think about business cash is in three layers.

1. Working balance. What you need to pay suppliers, salaries and bills over the next month or so. This stays in the main balance.
2. Tax money. VAT, Corporation Tax, PAYE or Self Assessment that is already owed or building up. This belongs in Tax Pots or a clearly named pot, because it is not yours to spend.
3. Reserve. Money for a slow quarter, a late-paying client or an unexpected cost. Many small businesses aim for a few months of fixed costs. This is what the Instant Access Savings Pot is for.

Anything beyond those three layers is surplus. For a limited company, surplus cash can stay in the company earning interest, be invested, go into a pension contribution or be paid out to shareholders, and each has different tax treatment. That decision is worth an hour with your accountant once a year. For a sole trader, surplus business money is simply personal money, so ISAs and personal savings accounts come into play.

The instant access pot is a good home for the reserve, and for tax money that will sit for months if you are disciplined about moving it back before the bill is due. It is not usually the best home for money you will not need for years.

Is Monzo Business a good place for business cash?

For an operating reserve that should be instantly available, the savings pot is convenient and competitive, especially on a plan with the better rate. For larger sums you will not touch for a year, compare fixed and notice accounts, and remember the FSCS limit applies across everything you hold with one bank. If you are comparing Monzo with another digital bank, our Monzo Business vs Starling comparison looks at both.

If you have never had a Monzo account of any kind and want to open one, the Monzo Business referral link page explains the reward and the four steps to complete within 30 days.