As one of our most popular reads, this article has been updated for 2018
If you’re trying to compare business bank accounts to figure out which one offers the best package for your startup, check out our guide to 2018 business bank accounts.
We’ve only compared startup business accounts offering 12 months or over of fee-free banking to successful applicants (although we’ve also included a section on 2018's ‘challenger’ banks). Remember that other providers are available and you should do your own research before choosing an account.
Business accounts tend to come with annual fees, but the banks we’ve listed below all offer 12 months plus of fee-free banking. Most of these accounts are designed for small to medium-sized businesses that are just getting started, so your turnover (or projected turnover) often needs to be under a certain amount.
The bank accounts we’re comparing tend to come with the perks you’d expect, so we haven’t listed them all for each account. For example, most of them offer:
We’ve focused mainly on bank accounts for startups in this article. But most of these include an option for switchers, and most banks will also offer a specific account for established businesses. Let us know in the comments if you’d like an article that focuses on bank accounts for businesses that have been trading for more than a year or two, and check out the current account switch service if you’re looking to change banks but want a bit of help.
Bear in mind that anything considered a ‘non-standard transaction’ like a Clearing House Automated Payment system (CHAPS) payment, a foreign transaction, or use of an overdraft facility will usually still be subject to charges, even during the fee-free period. Check the terms and conditions carefully to see which services incur a charge and how much you’ll pay.
The other thing to watch out for is the tariff you’ll be paying once your fee period is over. Some banks will switch you automatically onto their standard tariff while others will offer you a choice. You may choose to shop around though, once your fee-free period is over, for a good switching deal. Many of the banks below offer the same sort of fee-free period to switchers – just take a look at their specific websites or visit in-branch and see what’s right for you.
Here they are, in no particular order.
Small to medium-sized businesses with up to two directors, owners (shareholders) or partners.
There’s a 12-18 month fee-free period and you can also earn 0.10% gross/AER (variable) on any credit balances. Santander also offer a popular Business Current Account option option for more established businesses.
It’s worth noting that Santander have been awarded Best Business Current Account Provider for the last 15 years by Moneyfacts, along with a couple of other business banking awards.
The 18 months fee-free period is only open to existing or new business 123 World or Santander Select customers. For everyone else who qualifies, it's 12 months. After your time’s up on the fee-free period, you’ll be moved onto their monthly £7.50 tariff.
Startups with an annual turnover of up to £2 million.
HSBC offer an 18 month fee-free period, and will give you 12 months at a fixed price after your free banking period ends (currently, this is £5.50 a month). They also have a ‘Best Tariff Promise’, which ensures you’ll be moved onto a standard tariff that suits your business, when the time comes.
The Best Tariff Promise is based on HSBC’s annual review of your account activity. And despite the fixed price period, you’ll still pay charges on certain services and transactions.
Startup businesses opening their first account within 12 months of trading.
You can get 25 months of fee-free banking with Yorkshire Bank. This is also open to established businesses, looking to switch.
As with most other accounts, there are additional services and borrowing charges which are not part of the free banking offer. At the end of the fee-free period, you’ll move onto Yorkshire Bank’s standard business banking tariff, which is currently £5.00 a month.
Businesses that have been trading for less than a year and have an annual turnover under £1 million.
NatWest offer an 18 month fee-free period, along with no annual fees on their Business Credit Card for the first 12 months. You can also apply for an arranged fee-free £500 overdraft facility.
NatWest stipulates that unarranged borrowing, other additional services and “Bankline Charges” aren’t part of the offer.
At the end of the no-fee period, you’ll automatically go onto their standard tariff. For the credit card, you’ll need to apply within six months of opening your business current account. The overdraft carries specific charges, too.
Small businesses setting up their first bank account within the first 12 months of trading.
The Barclays account offers 12 months of fee-free banking, along with monthly loyalty rewards, giving you the opportunity to earn back some of your future charges. There are also two price plans, designed to give flexibility on your payments in or out.
Barclays do charge for non-standard transactions, such as stopped cheques and international transactions.
Startups and established businesses with a turnover of less than £2 million.
Clydesdale currently offer 25 months of fee-free business banking (offer covers monthly account fees and service charges).
The offer excludes international payments and Clearing House Automated Payment System (CHAPS) payments. Limits do apply to the fee-free period, and when it ends you'll automatically move to the standard business banking tariff, which is currently £5.00 a month.
Businesses with an annual turnover and/or balance sheet less than £2 million.
You'll find a Local Business Manager in every one of Metro's branches, making it easy to pop in and get expert help from the get-go. There's no maintencance fee for this account, as long as you keep a daily balance of £5,000 or more over the month.
It's worth having a good look around Metro's business banking options, as there are interesting deals not just for business current accounts, but also commercial accounts (for businesses turning over £2 million or above, or with more complex needs), community accounts for clubs, societies and charities, and foreign currency accounts.
Whilst there's currently an indefinite fee-free period, you'll need to keep your daily balance above £5,000 every day within the month. If you fall short, there's a £5.00 monthly account fee to pay. You'll also get 50 free UK transactions each month, but if you exceed this limit, a fee kicks in at 30p for each transaction. There are other charges too, for non-standard transactions.
Keen to try a new way of banking? ‘Challenger banks’ are becoming more and more mainstream, and often make entrepreneurship and small business management part of their core offering.
A challenger bank is usually a smaller retail bank, set up with the aim of competing with large, long-established national banks like the ones mentioned above. We did an in-depth study of the UK’s small business challenger banks, but as you’d expect, the list is constantly changing.
Alongside Tide’s mobile app and Metro Bank’s fast-growing high street presence, you could also check out Coconut: a new kind of bank account for freelancers, and any others that catch your eye during research.
So, who offers the best deal for small business banking in the UK?
We’re non-advisory so this is just a list, but here’s an at-a-glance summary of the fee-free periods for our seven startup bank accounts. Remember, it’s in no particular order!
|Yorkshire Bank||25 months|
|Metro||Indefinite (but with separate limits)|
Have you found a business bank account you're really pleased with? Tell us in the comments.
Keep up to date with Simply Business. Subscribe to our monthly newsletter and follow us on social media.Subscribe to our newsletter
99 Gresham Street
29 St Katherine's Street
© Copyright 2019 Simply Business. All Rights Reserved. Simply Business is a trading name of Xbridge Limited which is authorised and regulated by the Financial Conduct Authority (Financial Services Registration No: 313348). Xbridge Limited (No: 3967717) has its registered office at 6th Floor, 99 Gresham Street, London, EC2V 7NG.