If your business is in the enviable position of having a lump sum that you would like to put aside as savings, then selecting the right business savings account for your circumstances is essential to ensure that your savings give you the best return.
There a variety of business savings products available that can offer instant access or can provide high rates of returns for either fixed term savings or notice period accounts where you will need to give an agreed notice period to withdraw funds.
Below we have looked at what some of the leading business savings account providers offer.
Topics
Featured: Aldermore*
Some of the features and benefits of Aldermore’s business savings accounts.
- Interest rates up to 4.35% AER
- Offers a range of savings accounts to SMEs
- Competitive interest rates
- Minimum deposit of £1,000
- Choice of instant access and fixed term accounts
- Flexible accounts
- Instant access account
- Variable and fixed rate accounts
- Choice of fixed rate accounts
- Customisable accounts
- Fixed terms from 60 days to 5 years
Aldermore offers three business savings accounts to small to medium-sized businesses offering competitive interest rates. They offer a rate checking tool to compare their accounts interest rates. They offer accounts with a minimum deposit of £1,000 to £1 million and corporate savings accounts for those wanting to deposit higher amounts.
Aldermore’s Easy Access Account offers an easy access account where you can make a deposit and withdraws whenever you need to with a variable interest rate. They offer two fixed rate business accounts that offer a choice of fixed terms from 60 days to 5 years. One has the option to access your money and the other doesn’t.
The table below gives a quick price comparison of the top UK providers for business savings accounts.
| Company | Min Account Balance | Max Account Balance | Interest Rates (Range) AER |
|---|---|---|---|
| Aldermore | £1,000 | £1 million + | 3.25% - 4.35% |
| Santander | £1 | £5 million | 0.40% - 1.40% |
| HSBC | No minimum | No limit | 1.80% - 1.89% |
| Metro Bank | No minimum | Not stated | 1.10% - 3.71% |
| Lloyds Bank | £1 | £5 million | 0.90% - 3.40% |
| TSB | £1 | £5 million | 0.65% - 0.90% |
| Barclays | No minimum | £50 million | 1.00% - 1.61% |
| NatWest | No minimum | Not stated | 1.36% - 4.00% |
| RBS | No minimum | Not stated | 1.36% - 4.00% |
| Bank of Scotland | £1 | £5 million | 0.90% - 3.41% |
| Nationwide | £5,000 | £10 million | 1.46% - 1.50% |
| Virgin Money | £1,000 | £1 million | 1.00% - 4.50% |
| State Bank of India (UK) | £10,000 | £5 million | 0.00% - 4.25% |
| United Trust Bank | £5,000 | £1 million | 3.50% - 5.00% |
| Charity Bank | £1,000 | £666,667 | 2.28% - 4.21% |
| Kent Reliance | £1,000 | Not stated | 3.00% |
| Cumberland Building Society | £1 | £1 million | 2.40% - 2.60% |
| Redwood Bank | £10,000 | £1 million | 2.85% - 4.85% |
| Shawbrook Bank | £5,000 | £2 million | 0.90% - 4.90% |
| Cambridge Building Society | £1,000 | £2.5 million | 1.95% - 3.50% |
| Allied Irish Bank | Not stated | No maximum | 1.75% - 4.00% |
| Monzo | No minimum | Not stated | 1.50% |
| Oak North | £10,000 | £1,000,000 | 1.00% - 2.00% |
| Bank of Ireland | 1EUR | Not stated | Variable |
* The facts and figures included here come from each company’s website and were accurate at the time of writing but may have since changed. Also, please keep in mind these may not be apples to apples comparisons as each provider offers different solutions. This guide should be used as a starting off point for more research on your part.
Below we profile each of the companies’ services and features in a bit more detail.
Note companies are ranked in no particular order and this no way indicates one solution is better than another.
1. Santander
Some of the features and benefits of Santander’s business savings accounts.
- Offering interest rates up to 1.40% AER
- Offers a range of business savings accounts
- Minimum opening deposit on some account of £1
- Account with easy access and instant withdraws
- Higher rate interest account with no withdraws
- Fixed rate savings with no transactions within the term
- Offers client saver account to hold clients’ funds in
- Corporate and commercial savings accounts for those with specialist needs
- Accounts allowing you to save up to £5 million
- Preferential rates for 123 Business World customers
Santander offers a range of business savings accounts with preferential rates for their 123 Business World customers. They offer three business savings accounts and a client saver and bespoke corporate and commercial savings accounts for customers with specialist needs.
Santander’s Business Everyday Saver and Business Reward Account offer easy and instant access to funds online, over the phone or at an ATM. Both require a minimum £1 deposit. The Business Reward Saver offers a high rate of interest when you don’t make withdraws. The Fixed Rate Business Bond is for a fixed term with no transactions during the term. The minimum deposit is £5,000 up to £5 million.
2. HSBC
Some of the features and benefits of HSBC’s business savings accounts.
- Has a range of business savings accounts
- Flexible savings accounts
- Earn additional interest whilst maintaining access to funds
- Easy and instant access savings account via the internet, phone or branch
- No saving limits
- Earn greater interest on higher account balances
- An investment account that offers higher variable rates for fixed periods
- Offers a client deposit account
- Offers a community savings account
- Available to non-current account holders
HSBC offers a range of business savings accounts available to existing and non-current account customers. They offer two types of savings accounts – instant access and fixed term account. The instant access account is the Business Money Manager which has no minimum deposit or maximum limit.
HSBC’s fixed term deposit account is the Money Market Account which offers three types of accounts – Call Account, Notice Account and Fixed Account. These all offer higher variable interest rates linked to the amount of money deposited and the fixed term length. Minimum deposit varies but start from £5,000 and can be fixed for periods from a day to 5 years.
3. Metro Bank
Some of the features and benefits of Metro Bank’s business savings accounts.
- Interest rates of up to 3.71% AER
- A range of business savings accounts
- Maximise your interest
- Choice of instant access or fixed term accounts
- Instant access account with variable interest rates
- Fixed term accounts offering higher interest
- The more you save the greater the interest
- No hidden fees or monthly charges
- Offers client deposit accounts
- Offers community deposit accounts
- Manage them through your online account
Metro Bank offers a range of business savings accounts that allow you to maximise your interest and make your money work for you. They offer a choice of instant access accounts and fixed term accounts. Their instant access account is the Business Instant Access Deposit Account which offers a variable interest rate and allows you full access to your funds through your online account.
Metro Bank’s Business Fixed Term Deposit Account offers interest rates vary depending on the amount of money deposited and the length of fixed-term chosen. Terms are from 1 month to 2 years with a minimum deposit of £5,000.
4. Bank of Ireland
Some of the features and benefits of Bank of Ireland’s business savings account.
- Offers flexible deposit options
- Tailored to your needs
- Choice of Fixed Term Deposits
- Business Demand Deposit Account
- Available to existing customers
- Discuss your needs with your Relationship Manager
- Minimum lodgement of 1EUR on the Demand account
- Minimum lodgement of 5,000EUR on the Fixed Term accounts
- Instant access on the Demand account
- Fixed terms of three, six or 12 months
Bank of Ireland is an Irish bank offering a variety of business services including two savings accounts. The Business Demand Deposit Account allows unlimited access, variable interest rate and it has a minimum lodgement of 1EUR and no maximum amount and additional lodgement can be made at any time.
Bank of Ireland offers three deposit accounts – Growth offers three to seven-year terms with single lodgement and a minimum balance of 5,000EUR, Optimum offers three, six or 12-month terms with full access to your money and minimum lodgement of 100,000EUR, and Platinum offers term from three to 24 months a with optional access levels and minimum lodgement of 250,000EUR.
5. Lloyds Bank
Some of the features and benefits of Lloyds Bank’s business savings accounts.
- Interest rates up to 3.40% AER.
- Offers a range of business savings accounts tailored to match your business turnover
- Flexible accounts that can be tailored to your needs
- Minimum deposit of £1
- Maximum deposit of £5 million
- Instant access accounts
- Fixed term accounts
- Notice account
- Choice of variable and fixed rate accounts
- Fixed terms from overnight to 3 years
- Also offers client accounts
Lloyds Bank offers business savings accounts that match the size of the business and its turnover. Their savings accounts are flexible and can be tailored to meet your needs. They offer instant access, fixed term, notice account and client accounts.
Lloyds Bank’s instant access account offers a variable interest rate and requires a minimum deposit of £1 and a limit of £5 million. Their other accounts have a minimum of £10,000 to £5 million deposit. The Fixed Term Deposit account length is from overnight to 3 years with a fixed interest rate. Their 32 Day Notice Account has a variable rate tracking the Bank of England Bank Rate.
6. TSB
Some of the features and benefits of TSB’s business savings accounts.
- Interest rates up to 0.90% AER
- Offers a single business savings account
- Suitable for lump sums
- Instant access accounts
- Tiered interest rates
- Interest calculated daily and applied monthly
- Minimum deposit from £1
- Maximum limit if £5 million
- Only available to existing TSB business customers
- Available to sole traders
- Offers client accounts
TSB is a UK banking provider that offers business savings accounts to their existing business customers. They offer two types of account – an Instant Access Account and a Client Account.
TSB’s Instant Access Account offers customers access to their funds online, over the phone and in the branch. It offers tiered interest rates that are calculated daily and paid monthly. It has a minimum opening deposit of £1 and a maximum savings limit of £5 million. The Instant Access Savings Account is available to most businesses including sole traders.
7. Barclays
Some of the features and benefits of Barclays’ business savings accounts.
- Interest rates of up to 1.61% AER
- Choice of business saving accounts
- Competitive interest rates
- Instant access accounts
- Fixed term accounts
- Minimum deposit of £1
- Maximum saving limit of £50 million
- Unlimited free withdraws on instant access account
- Tiered savings rates
- Fixed terms from overnight to 12 months
- Also offers client deposit accounts
Barclays offers a range of business savings accounts with either instant access or fixed terms. Their accounts are the Business Premium Account, Treasury Deposit Account and Clients Premium Account.
Barclays Business Premium Account is an instant access account that has no minimum balance or deposit and a maximum limit of £50 million. You can access the account online, over the phone and in branch and make unlimited free withdrawals through your Business Current Account. Their Treasury Deposit Account is a fixed term account offering higher rates of interest that are fixed of the term which can be for overnight to 12 months.
8. NatWest
Some of the features and benefits of NatWest’s business savings accounts.
- Interest rates up to 4.00% AER
- Choice of business savings accounts
- Instant access account
- Account suitable for cash reserves
- Notice period account
- Fixed term accounts
- Choice of notice period of 35 or 95 days
- Choice of interest rates
- No minimum deposits or balances
- Fixed terms from overnight to 12 months
- Offers client accounts too
NatWest offers a choice of business savings accounts that provide very different terms. Their three accounts are Business Reserve, Liquidity Manager Notice Account and Treasury Reserve. The Business Reserve account is an instant access account that can be used for savings or reserves that you want to set aside and it has no minimum or maximum balance.
NatWest’s Liquidity Manager Notice Account offers higher rates of interest on lump sums but requires a notice period of either 35 or 95 days for withdrawals. The Treasury Reserve account is a fixed term account offering periods from overnight to 12 months with a minimum deposit of £25,000.
9. RBS
Some of the features and benefits of RBS’s business savings accounts.
- Interest rates up to 4.00% AER
- Offers a range of business savings accounts
- Accounts suitable for cash reserves and lump sum savings
- Instant access account
- Notice period account
- Fixed term accounts
- A notice period of either 35 or 95 days
- Minimum fixed terms of overnight to 12 months
- Fix your own terms to get a tailored rate
- No minimum deposits or balances on some accounts
- Choice of two client accounts
RBS offers several business savings accounts that offer a variety of terms to meet the different needs of business savers. They offer three business savings accounts which are Business Reserve, Liquidity Manager Notice Account and Treasury Reserve.
RBS has one instant access account called Business Reserve that has no minimum or maximum balance. Their other two business savings accounts have fixed terms (Treasury Reserve) or notice periods (Liquidity Manager Notice Account). The fixed term account is available for amounts over £25,000 with periods from overnight to 12 months. The notice account offers a choice of 35 or 95 days’ notice period and has no minimum or maximum balance.
10. Bank of Scotland
Some of the features and benefits of Bank of Scotland’s business savings accounts.
- Interest rates up to 3.41% AER
- Choice of business savings accounts
- Flexible accounts
- Instant access accounts
- Fixed term accounts
- Notice account with a 32-day period
- Fixed terms from overnight to 3 years
- Minimum deposit of £1 on some accounts
- Maximum deposit of £5 million on all accounts
- Offers both variable and fixed rate accounts
- Client accounts also available
Bank of Scotland offers several business savings accounts which include instant access, notice period, fixed term and client accounts. Their Business Instant Access account offers access to your savings with no withdrawal penalties with a minimum deposit of £1 and maximum savings of £5 million.
Bank of Scotland’s notice accounts has a minimum deposit of £10,000 and a maximum of £5 million that has no fixed term but requires 32 days’ notice for withdrawals. Their fixed term account has a minimum deposit of £10,000 and £5 million maximum limit available on fixed terms from overnight to 3 years.
11. Nationwide
Some of the features and benefits of Nationwide’s business savings accounts.
- Interest rates up to 1.50% AER
- Offers a variety of business saving accounts
- Instant access account
- Notice accounts
- Fixed term accounts
- 45 and 95 day notice periods
- 6 months to 5-year fixed terms
- Minimum deposits of £5,000
- Maximum savings of £10 million
- Accounts for charities
- Available to most UK-based businesses
Nationwide offers a variety of business savings accounts that provide accounts to meet most business needs including charities. They offer three types of business savings accounts which are instant access, notice accounts and fixed term accounts.
Nationwide’s instant access saver offers competitive interest rates and no withdrawal penalties. Notice accounts offer 45 and 95 day notice periods. Both accounts require a minimum £5,000 deposit and a maximum limit of £10 million and have a minimum withdrawal amount of £500. The fixed term accounts have a choice of term from 6 months to 5 years for amounts between £5,000 to £10 million and no withdrawals during the term.
12. Virgin Money
Some of the features and benefits of Virgin Money’s business savings accounts.
- Interest rates up to 4.50% AER
- Offer several business savings accounts
- Competitive rates
- Choice of variable and fixed rates
- Instant access accounts
- Fixed term accounts
- Online account management
- Choice of 1 or 2 years fixed term
- Minimum deposit of £1,000
- Interest paid monthly or annually on a fixed term
- Available to SMEs and sole traders
Virgin Money offers business savings accounts to a wide variety of businesses that are registered in the UK as an SME or micro business including sole traders. They offer three types of accounts that give competitive interest rates. These accounts are instant access or fixed term accounts.
Virgin Money’s business savings accounts all have a minimum deposit of £1,000 and a maximum limit of £10 million. The instant access account is called Business Access Savings Account which allows you to access your savings at any time through your online account. They offer two fixed term accounts that can be fixed for 1 or 2 years with higher fixed interest rates.
13. State Bank of India (UK)
Some of the features and benefits of State Bank of India’s business savings accounts.
- Interest rates up to 4.25% AER
- Offer a single business savings account
- Instant access account
- Requires a minimum monthly average balance of £10,000
- 25 free transactions per month
- Interest is paid monthly
- Maximum limit of £5 million
- No annual fee
- No notice period or penalties for withdrawals
- Can be accessed in branch, post or online
- Available to small businesses only
State Bank of India offers a business savings account that is available only to small businesses that have less than 10 people and turnover below €2 million. The account has no annual fee if an average minimum monthly balance is maintained at £10,000 and there are also no transaction fees for the first 25 transactions if this minimum level is maintained.
State Bank of India applies interest monthly on balances between £10,000 and £5 million. This account is an instant access account that can be accessed and managed in their branches, through the post or online on their banking facilities.
14. United Trust Bank
Some of the features and benefits of United Trust Bank’s business savings accounts.
- Interest rates up to 5.00% AER
- Offers two bond accounts
- Competitive interest rates
- Fixed term savings account
- Choice of terms
- No hidden charges
- Minimum deposit of £5,000
- Interest is paid on the account maturing
- Can be set up online or through the post
- Available to all businesses including partnerships and sole traders
- Also available to pension funds, trusts, clubs, and schools
United Trust Bank is not a traditional high street bank, but they offer their banking services online and through the post. They offer a range of business banking services which include two fixed term bond saving accounts. They provide a choice of two accounts that offer two term lengths of one and two years.
United Trust Bank claims to offer businesses competitive interest rates and that their accounts have no hidden charges. Their two accounts offer two levels of interest rates with the high rate being for the longer fixed term length. Both accounts have a minimum of £5,000 deposit and a maximum account limit of £1 million.
15. Charity Bank
Some of the features and benefits of Charity Bank’s business savings accounts.
- Interest rates up to 4.21% AER
- Ethical banking provider
- Banking with them supports charities and social enterprises in the UK
- Offers a fair return
- Instant access savings account
- Notice accounts
- Fixed term accounts
- 100-day notice period only
- Fixed terms of 1 and 5 years
- Flexible instant access savings accounts
- Available to businesses including sole traders, charities and community groups
Charity Bank is a banking provider that is different to most banking providers as they are committed to being an ethical bank as they owned by charitable foundations, trusts and social purpose organisations. They work with businesses to offer them savings products that help others by using the money to fund loans and support charities and community groups.
Charity Bank offers four savings accounts – instant access, notice account and two fixed term accounts. Their instant access account is a simple and flexible account. Their notice account is fixed at 100 days notice period and their fixed term accounts offer two periods – one or five years.
16. Kent Reliance
Some of the features and benefits of Kent Reliance’s business savings accounts.
- Interest rates up to 3.00% AER
- One savings account
- Online account
- Instant access
- No notice period or penalties for withdrawals
- Choice of monthly or annual interest payments
- Simple to set up online
- Variable interest rates
- Minimum deposit of £1,000
- Only available to private limited companies
- Branches located in South East England
Kent Reliance are a South East of England based banking provider that offers its products to both individuals and businesses. These products include savings, ISAs, bonds, mortgages and business savings. They offer a single business savings account that is available to private limited companies in the UK.
Kent Reliance’s business savings account is a variable interest account that offers instant access to your savings without the need to give notice or be subject to penalties for withdrawals and the choice of monthly or annual interest payments. This account is simple to set and can be managed online but requires an initial deposit of £1,000.
17. Cumberland Building Society
Some of the features and benefits of Cumberland Building Society’s business savings accounts.
- Interest rates up to 2.60% AER
- Offers a variety of business savings accounts
- Instant access savings
- eSavings account
- Notice accounts
- Fixed term accounts
- Minimum initial deposit starts at £1
- Maximum savings of £1 million
- 40 day notice period
- 2 year fixed terms
- Access through internet banking, in branch and over the phone
Cumberland Building Society is a local banking provider in the North West of England and parts of Scotland who offers a range of accounts and lending products to individuals and businesses. They offer four business savings accounts that provide a choice of instant access, notice period accounts and fixed term accounts.
Cumberland Building Society offers two instant savings accounts that have variable interest rates with an eSavings account that is an exclusive online savings account available to Business Internet Banking customers which provides a higher rate of return. They also offer a 40 day notice period account and a 2 year fixed rate account.
Cumberland Building Society website
18. Redwood Bank
Some of the features and benefits of Redwood Bank’s business savings accounts.
- Interest rates up to 4.85% AER
- Simple savings account
- Choice of annual and monthly interest
- Notice period account
- 35-day notice option only
- 35% interest rates
- Allows unlimited top-ups
- Minimum balance of £10,000
- Maximum balance of £1 million
- Unlimited number of withdrawals
Redwood Bank is a business banking provider based in the UK and was established to help businesses and support their business growth. They offer one single business savings account that they claim is a simple account that makes business savings easier.
Redwood Bank’s business savings account is a notice period account that requires you to give 35 days notice to access your savings. Their savings account allows you to make as many top-ups as you want up to the maximum limit of £1 million. You can also make as many withdrawals as you like with 35 days notice as long as your minimum balance stays above £10,000.
19. Shawbrook Bank
Some of the features and benefits of Shawbrook Bank’s business savings accounts.
- Interest rates up to 4.90% AER
- Choice of business savings account
- Accounts designed to suit business needs
- Offers strong savings rates
- Notice accounts
- Fixed rate accounts
- Minimum deposit from £5,000
- Maximum deposit of £2 million
- 1 year fixed term
- 100 day notice period
- Specialist savings provider
Shawbrook Bank is a UK based specialist savings and lending provider that offers its services to SMEs and individuals. They offer businesses two savings accounts that are a notice account and a fixed rate account that they state are designed to suit business needs.
Shawbrook Bank’s notice period account requires 100-day notice for any withdrawals and is available for savings from £5,000 to £2 million and it gives a variable annual interest rate which will drop if the minimum balance is not maintained. Their fixed term account has a 1-year term with a fixed interest rate to guarantee returns.
20. Cambridge Building Society
Some of the features and benefits of Cambridge Building Society’s business savings accounts.
- Interest rates up to 3.50% AER
- Offers a choice of business savings account
- Instant access
- Fixed term bond
- Notice account
- Fixed rate 1-year account
- 100 day notice period
- Minimum deposit of £1,000
- Maximum savings of £2.5 million
- Available to sole traders, partnerships, limited companies, charities, clubs and associations
- Offers a specialist account for Council’s
Cambridge Building Society is an independent, mutual society established in 1850 and has been delivering banking services in its community since then. They offer a broad range of banking services which include business banking services such as business savings accounts. They offer these accounts to a broad range of businesses including sole traders, as well as charities, clubs and associations, and provides a specialist account for Councils.
Cambridge Building Society has four business savings accounts – an instant access account, fixed term bond, notice period account and a Council account. The fixed term account offers 1 year fixed interest rates and the notice account requires 100 days notice for withdrawals.
Cambridge Building Society website
21. Allied Irish Bank
Some of the features and benefits of Allied Irish Bank’s business savings account.
- Interest rates up to 4.00% AER
- Offers a choice of savings and deposit accounts
- Fixed-term deposit accounts
- Demand deposit accounts
- Offers a choice of major currencies
- Can be tailored to your business’ needs
- Fast and efficient account opening
- Electronic banking
- Provides finance solutions
- Has a network of branches
- Available to non-existing customers
Allied Irish Bank is an Irish banking provider that operates in both Ireland and the UK. They offer a range of business banking products including current accounts and savings accounts. They offer their saving and deposit accounts to new and existing customers.
Allied Irish Bank offers two products which are the Fixed Term Deposit Account and Demand Deposit Account. The fixed-term account doesn’t allow withdrawals but is available in all major currencies. The demand account allows savings to be withdrawn instantly and it has a daily variable interest rate that is applied monthly or quarterly. Accounts are quick to open and can be done in one of their branches.
22. Monzo
Some of the features and benefits of Monzo’s business savings account.
- Interest rates up to 1.50% AER
- Provides a Tax Pot with business accounts
- Allows you to set automatic levels to set aside
- Set aside money for a variety of reasons
- Helps you to save for tax and bills
- Receive instant notifications on payments and savings
- Easily move money in and out
- Won’t show as part of your available balance
- Reduce administration
- Removes worry about tax savings
- Offered to Monzo Business Pro customers
Monzo is a digital banking provider offering an alternative to traditional banks through their online and app management. Their Business Pro customers can add a savings account called Tax Pot to their account.
Monzo’s Tax Pot is designed to help businesses to save a proportion of their income for expenditure such as tax, bills and overheads. You can receive notifications of payments and select an amount to set aside in the Tax Pot. You can select the percentage of income to set aside but you can still move funds in and out of the Tax Pot whenever you want, but it won’t show as part of your available balance.
23. Oak North
Some of the features and benefits of Oak North’s business savings account.
- Interest rates up to 2.00% AER
- Offers a choice of three savings accounts
- Fixed Term Savings
- Notice Accounts
- Easy Access Accounts
- Provides a range of terms
- Longer the term the greater the interest rate
- Online account management
- Options for withdraws
- Some accounts allow additional deposits
Oak North is a banking provider offering saving and loan products to businesses. They offer three savings accounts – fixed term, notice and quick access with a minimum deposit of £10,000 and a maximum of £1,000,000.
Oak North’s Fixed Term Savings accounts are available as either six or 12-month terms with a single deposit and interest being paid on maturity. The Notice Accounts are 35, 60, 95 or 120 days with interest increasing with the length of term but you can make unlimited withdraws with the permitted notice. The Easy Access Account offers next-day access to your savings and additional deposits are allowed at any time.
Common Questions
Can you use a savings account as a business account?
Yes, you can use a savings account as your business bank account. Both a current account for business and a savings account can help your business operate smoothly.
Business savings accounts earn interest. Business savings accounts also do not charge monthly fees as some current accounts do.
If you are a freelancer, you can use your personal bank account for business purposes, however, limited companies must legally open separate business bank accounts.
Should businesses have a savings account?
Businesses do not have to have a savings account.
A limited company is legally obligated to have a business bank account, but it can be either a savings or a current account.
Sole traders and freelancers can use a personal account as they are not separate from their business, or they can open a business savings account if they wish.
Does money in a business account get taxed?
In the UK you can get taxed on the interest earned in your bank account. This includes business bank accounts.
How do I choose a savings account for my business?
Choosing the right savings account will depend on the goals of your business as well as your financial planning. You may be tempted to get a business bank account that offers the highest interest rate, but there are other factors you should consider, such as whether it is protected by the Financial Services Compensation Scheme, and the future financial goals of the business.
Here are some factors to consider when choosing a business savings account:
1. Are you saving for a near-future purchase?
If you are planning to use your money for a large upcoming purchase – whether personal or for the company – then the money in the business savings account will not be there long enough to see a proper return through interest.
In such an instance, you should consider getting easy access accounts, which have a lower interest rate but allow you to instantly withdraw the money from your business bank account.
If you do not plan on having the money in the account for a long time, then find a bank that offers business bank accounts with monthly interest rates, not annual rates. You should just make sure that there are no minimum withdrawal periods, as you can face a penalty if you withdraw the cash earlier.
Some savings accounts can be opened with as little as £1.
2. Are you saving for long term business goals?
If you are planning on saving for a large purchase in a few years – like buying a business vehicle – then you should consider opening a fixed-term savings account. These accounts have higher interest rates, but you cannot access your money for a fixed time period.
If you are a sole trader or freelancer, you should make use of an Individual Savings Account (ISA), which is tax-free on any interest you earn up to £20,000.
You can also apply for a Lifetime ISA, which has an additional bonus of £1,000 a year. These will not apply to limited companies.
It is recommended that sole traders do not have more than £85,000 in their business savings account, as the Financial Services Compensation Scheme does not protect amounts over that.
3. Long-term Saving Plans
If you do not have a set plan in mind that you are saving for, then you should still consider getting a business bank account aimed at savings. You can earn interest on your business income, especially if you consider tax-free, fixed-rate accounts.
Of course, if you are going to do a lot of business transactions, then you do not want to have your money tied down in a business bank account where you cannot access it, so keep this in mind.
Can I earn interest on a business account?
Yes, business savings accounts offer interest similar to personal accounts. This means you can make money from your money while saving. Interest rates on business savings accounts are not very high, but they do still allow you to earn some extra cash.
What is the difference between a business account and a savings account?
The main difference between a business current bank account and business savings account is that the one pays interest and the other doesn’t.
A business bank account is used to pay for all ongoing cashflow needs. However, if your business has money beyond these needs you can put it in a business savings account and earn some interest.
Just be aware that while you can always access your money with a current account the same is not always true with a savings accounts.
Usually business savings accounts come in 3 varieties:
– Instant/Easy Access: Get your money instantly, but generally pay the lowest interest rates.
– Notice Accounts: Lock your money away from 30 – 365 days to enjoy a slightly higher interest rate.
– Longer term fixed rate accounts: Lock away your money for 6 months or longer with a fixed interest rate. Usually pay the higher rate of interest, but can mean you won’t get access to your money for up to 5 years.
* Please note we have an affiliate relationship with Aldermore which means they pay us a fee for each opened account. However, this comes at zero cost to you and helps keep this website free.