The best free bank accounts for small businesses in the UK: my personal recommendations
As a small business owner, knowing what the best free bank accounts are that fit your needs is crucial to your financial success. The good news is, there are a number of great free bank accounts available in the UK that do their job just fine, and you can save upwards of £150 per year in bank fees.
In this article, we’ll take a look at what I consider to be the top four free bank accounts for small businesses in the UK, and I’ll share what fees they charge, and the pros and cons for each business bank account.
What we’ll cover:
Disclosure: There are some affiliate links below and I may receive commissions for purchases made through links in this post, but these are all products I highly recommend. I won’t put anything on this page that I haven’t verified and/or personally used.
Why do I recommend these 4 best free bank accounts in particular?
I have written the following list based in part on my experience of working with some of these providers: I have a Revolut account as I often travel to Italy and benefit from their more convenient exchange rates, and I use a Monzo account as my personal current account. I have put together the information after having researched and vetted each one of these providers. I have read the small print on their websites, and collected thoughts and feedback from colleagues and peers who have direct experience in opening and using these services.
I hope this summary is useful to you in choosing the best free business bank account for your small business.
1. Starling
Starling Bank is probably the one I recommend the most as the best free business bank account for small businesses in the UK. Their customer service is award-winning, and everyone whom I’ve spoken to who uses Starling Bank is happy with the service they provide. If you are just starting out as a small business and have simple banking needs, Starling would work well for you – provided that you don’t handle tonnes of cash, and travel abroad.
Fees:
- No monthly account fees
- Free electronic payments (including Faster Payments and CHAPS)
- Free card payments (within the UK)
- 20p per cash deposit made at the Post Office
- 3% foreign exchange fee for transactions made in a foreign currency
- £2 fee for cash withdrawals at ATMs abroad (in addition to any ATM fees)
Pros:
- No monthly account fees, which can save you money compared to other traditional banks.
- Free electronic payments and card payments can be convenient and helpful for small business owners who frequently make transactions.
- The ability to deposit cash at the Post Office, even with a small fee, can be useful for businesses that deal with physical money regularly.
- Starling Bank’s mobile app offers various features and integrations, such as accounting software integration.
- Their customer service is highly rated, and they have won awards for their customer service.
Cons:
- A 3% foreign exchange fee can be expensive for businesses that frequently make international transactions. Some other banks may offer lower or no foreign exchange fees.
- The £2 fee for cash withdrawals at ATMs abroad can add up quickly, especially for businesses that travel frequently.
- Starling Bank is a relatively new bank, which may make some people hesitant to trust them with their business finances compared to more established banks.
- While their mobile app is convenient, it may not be suitable for businesses that prefer to manage their finances through desktop applications or in-person.
2. Tide
Tide’s is also a great option for start-ups and small businesses. I’ve been told that it’s very easy to open a new bank account with them, and that their app and online banking are intuitive and easy to use. The cash withdrawals cost less than Starling’s, so it’s great for cash-handling businesses with a lot of petty cash transactions.
Fees:
- No monthly account fees
- Free electronic payments (including Faster Payments and CHAPS)
- Free card payments (within the UK)
- 20p per cash deposit made at PayPoint
- 20p per cash withdrawal at an ATM (in addition to any ATM fees)
- No foreign exchange fees, but a markup is applied to the exchange rate.
Pros:
- No monthly account fees
- Free electronic payments and card payments
- Tide Bank’s mobile app offers various features and integrations, such as accounting software integration, which can streamline your business processes.
- The ability to deposit cash at PayPoint can be useful for businesses that deal with physical money regularly.
- No foreign exchange fees, which can be beneficial for businesses that frequently make international transactions.
Cons:
- While Tide Bank offers no foreign exchange fees, they apply a markup to the exchange rate, which can be less transparent than other banks that charge a flat fee.
- £1 to withdraw cash
- £1 to deposit cash at Post Office, or 3% at Paypoint
- No branches or cheque deposits
3. Monzo
Monzo is also a digital bank that comes with similar advantages as Tide and Starling. I use Monzo’s personal bank account for my personal transactions and I love it! Their budgeting and saving features helped me understand my spending data, and I have always had excellent experiences with their customer service. Great if you want user-friendly app and online banking services, and want to drill into your bookkeeping data.
Fees
- Free electronic payments (including Faster Payments and CHAPS)
- Free card payments (within the UK)
- 1.5% fee for cash deposits over £1,000 per month (up to a maximum of £3,000 per month)
- No foreign exchange fees, but a markup is applied to the exchange rate
- £1 fee for cash withdrawals at ATMs abroad (in addition to any ATM fees)
Pros:
- No monthly account fees
- Free electronic payments and card payments.
- No foreign exchange fees, which can be beneficial for businesses that frequently make international transactions.
- Monzo Bank’s app provides detailed categorization and analysis of expenses, allowing you to see where your money is going.
Cons:
- £300 deposit limits (£1000 every 6 months)
- No accounting integrations unless you get the pro account
- No overdrafts on the business account
4. Revolut
Revolut offers a Business account for freelancers and small businesses in the UK, but it’s not entirely free. They offer a free plan that includes basic features such as account management, payments and transfers in the UK, and a debit card. However, there are some limitations on this plan, including a monthly limit on free transfers and a cap on the number of free ATM withdrawals.
If you need more advanced features, such as international payments or higher monthly transfer limits, you’ll need to upgrade to a paid plan. The pricing for Revolut’s paid plans varies depending on the features and services you require.
Overall, while Revolut’s Business account may not be entirely free, it can still be a cost-effective option for small businesses that don’t require advanced banking services, and who might develop their banking needs in time.
Pros
- Easy to set up
- International payments: Revolut offers competitive exchange rates for international payments and allows businesses to make payments in more than 140 currencies.
- Expense management: the Revolut app offers a range of features that make it easy to manage expenses, including the ability to track spending, create custom categories, and upload receipts.
- Free card payments
Cons
- Limited free plan: Revolut’s free plan has some limitations, including monthly limits on free transfers and a cap on the number of free ATM withdrawals.
- 2% charge to withdraw cash
- Lack of physical presence
- Limited lending options: Revolut does not currently offer lending options such as business loans, which could be a disadvantage for businesses looking to borrow money.
Conclusions
Well, it looks like there’s a whole bunch of free business bank accounts for small businesses in the UK. Each bank has its own set of perks and quirks. So, before you go and pick one, it’s important to really think about what you need and do some digging to make sure you get the best deal for your biz. Happy banking, folks!
Other articles you may enjoy:
- Pensions for Sole Traders: Everything You Need to Know
- The Basics of Bookkeeping for Freelancers and Small Businesses
- How to Price Your Services as a Freelancer
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