8 best sole trader bank accounts in the UK for 2026

A sole trader bank account is a business current account in your own name, used only for business income and spending. Starling, Monzo Business Lite and Mettle offer one with no monthly fee, and Tide has a free plan. NatWest gives new businesses two years of free everyday banking, Lloyds and HSBC suit sole traders who want a high street bank, and Countingup combines banking and accounting from £5 a month. This guide compares fees, cash deposits, accounting tools and eligibility for each account. It also covers whether you need a separate account, what you need to open one and how your money is protected.

Do sole traders need a business bank account?

Sole traders are not legally required to have a business bank account, because you and your business are the same legal person. HMRC states that you might be able to use a personal or business bank account, as long as your records show which transactions are for the business, however, many personal current accounts don't allow business use in their terms. A separate account helps you:

• Complete your Self Assessment tax return faster, since every transaction relates to the business.

• Claim allowable expenses without picking them out of personal spending.

• Look more professional, with a business name on payments and invoices.

• Show lenders your trading income clearly when you apply for funding.

Compare sole trader bank accounts at a glance

Fees and features are correct as of November 2026 and can change, so check the latest terms before you apply.

Starling Bank: no monthly fee and a free MTD tool

Starling's sole trader account has no monthly fee and comes with free UK Faster Payments, Direct Debits and standing orders.

• Accounting Essentials is included, with a Making Tax Digital (MTD) tool that categorises expenses and sends quarterly updates to HMRC.

• Cash deposits at the Post Office cost £3 or 0.7% of the deposit, whichever is higher.

• Cash deposits are limited to £5,000 a day and £20,000 a calendar year.

• Free invoicing, Tap to Pay and Spaces for setting aside tax are included.

• International payments carry a 0.4% conversion fee and CHAPS payments cost £20.

• Arranged overdrafts aren't available on the sole trader account.

You must be a UK resident aged 18 or over and not in a partnership. Starling asks for your Unique Taxpayer Reference (UTR), but you can apply without one. The £20,000 annual cash limit makes it a better fit if you're mostly paid by transfer or card.

Monzo Business: a free plan that files to HMRC

Monzo Business is open to UK sole traders and limited company directors, with three plans.

• Lite is free and includes Making Tax Digital software that files directly with HMRC.

• Pro costs £9 a month, with the first month free, and adds invoicing, Tax Pots, virtual cards and accounting integrations.

• Team starts at £25 a month and adds expense cards, payment approvals and bulk payments.

• UK bank transfers, Direct Debits and standing orders are free.

• Cash deposits cost £1 each at PayPoint or the Post Office.

• Sole trader loans and overdrafts are available to eligible customers.

Mettle: free FreeAgent accounting software

Mettle is provided by National Westminster Bank plc and is open to sole traders and limited companies with up to two owners. There's no monthly fee.

• FreeAgent accounting software is included if you make at least one transaction a month from your account, otherwise FreeAgent fees apply.

• Cash deposits at the Post Office cost £2.75 each.

• Card cash withdrawals cost £1 each.

• Mettle+ is an optional add on costing £4 a month.

• Your balance can be up to £1 million.

Tide: a free plan with paid upgrades

Tide is open to sole traders aged over 18 with a UK based business, but not partnerships. You apply in the app with ID checks and a selfie.

• The free plan has no monthly fee and includes five bank transfers a month.

• Smart costs £12.49 a month and includes 30 transfers a month.

• Pro costs £27.49 a month and Max costs £69.99 a month, both with unlimited UK transfers under a fair use policy.

• Cash can be paid in at any Post Office or PayPoint.

Tide is not a bank. Its current accounts are powered by ClearBank, but some members hold electronic money accounts instead, so check which type you're opening.

Countingup: banking and accounting in one app

Countingup combines a business account with built in accounting and tax tools, and charges based on how much you pay in each month. Sole traders and limited company directors who are UK resident and aged 18 or over can apply, but partnerships can't.

• The £5 plan covers monthly deposits of up to £750.

• The £12 plan covers deposits from £750.01 to £7,500.

• The £20 plan has no monthly deposit limit.

• New customers get a three month free trial.

• Three account transfers and Direct Debits a month are free, then each one costs 27p.

• ATM withdrawals cost £1 each and foreign transactions are charged at 3%.

NatWest: two years of free everyday banking

NatWest's Start-up account gives new businesses two years of free everyday banking and FreeAgent accounting software.

• It's available to businesses trading for less than one year with turnover below £1 million.

• You must be the owner or director, aged 18 or over, and registered for UK income tax or corporation tax.

• Applicants can't have been declared bankrupt or have a County Court Judgment (CCJ).

• FreeAgent stays free for as long as you keep your NatWest business current account.

• International payments, Bankline and unarranged overdraft charges aren't covered by the free banking offer.

• After two years, the account moves to NatWest's Standard Tariff, which has no minimum monthly charge.

Lloyds Bank: 12 months free with MTD software

Lloyds' sole trader account is free for 12 months for first time Lloyds business customers, then costs £10 a month.

• Faster Payments, Direct Debits and standing orders are included.

• Free HMRC recognised Making Tax Digital software is included if your business falls under the rules.

• Cash paid in or out costs £0.85 per £100 at an Immediate Deposit Machine or £1.60 per £100 over the counter.

• Cheques cost £0.85 through the app or at an Immediate Deposit Machine, or £1.20 over the counter.

• Your estimated annual turnover must be £3 million or less.

HSBC UK: no monthly fee with branch access

HSBC UK's Small Business Banking Account has no monthly fee and is open to UK tax resident startups and small businesses.

• Standard domestic digital transactions and debit card payments are free.

• Branch cash deposits and withdrawals cost 1.5% of the value, rising to 2% from 14 December 2026.

• Post Office cash deposits and withdrawals cost 1.5% of the value.

• The separate £1.50 per transaction charge for counter cash is removed from 14 December 2026.

• Mobile cheque deposits cost 50p per cheque.

• Cash and cheques can be banked at over 11,500 Post Office branches.

What do you need to open a sole trader bank account?

You'll usually need to be 18 or over and a UK resident. According to the government's business banking guidance, you'll typically be asked for:

• Proof of your name and home address, plus your contact details.

• Your legal business name and any trading name.

• The date you started trading.

• A description of your main business activity.

• Your business address, if it differs from your home address.

• Financial information such as expected turnover.

• A business plan if you're new or expanding.

Some providers also ask for your UTR, which you get when you register for Self Assessment. Our guide on how to open a business bank account walks through the process step by step.

Is your money protected in a sole trader bank account?

Eligible deposits with a UK authorised bank are protected by the Financial Services Compensation Scheme (FSCS) up to £120,000 per person, per banking licence.

• Starling, Monzo, Lloyds, HSBC UK and NatWest are authorised UK banks.

• Mettle and NatWest share a banking licence, so deposits with both count towards one £120,000 limit.

• Tide accounts powered by ClearBank and Countingup accounts provided by Griffin Bank are FSCS protected.

• Electronic money accounts, held by some Tide, Mettle and longstanding Countingup customers, are safeguarded instead, which keeps your money separate from the firm's funds but isn't FSCS protection.

As a sole trader, your business and personal deposits with the same bank count towards the same £120,000 limit, because you're one legal person.

How do you choose the right sole trader bank account?

The right sole trader bank account is the one that matches how you get paid and how often you make payments. Before you apply, check these five things:

• Look for built in Making Tax Digital software, as the income threshold falls to £30,000 from April 2027 and £20,000 from April 2028.

• Compare cash deposit fees and limits if customers pay you in cash, since flat fees usually cost less than percentage charges on larger deposits.

• Check how many free transfers you get, as some free plans only include three to five a month.

• Find out whether lenders you may use accept statements from that bank, because not every lender accepts statements from every digital or challenger bank.

• Choose a provider that also offers limited company accounts if you plan to incorporate, as a sole trader account can't be used for a company.

Our guide to business bank accounts with no fees covers the hidden costs worth checking too.

Get funding for your sole trader business with Capitalise

Once you're trading and have a few months of business bank statements, you may want funding to buy equipment, cover a quiet month or take on a bigger contract. Capitalise works with a panel of 130+ lenders, including lenders that fund sole traders and self employed business owners. Complete one application and we'll match you with options that suit your income, trading history and the amount you need, with no obligation to proceed.