Once your limited company is incorporated, one of the first things you must do is open a dedicated business bank account. This is not optional — a limited company is a separate legal entity, which means its money must be kept entirely separate from your personal finances. Using a personal account for company transactions creates a bookkeeping headache and can cause problems at year-end.
The good news is that the market for business banking has never been more competitive. You no longer have to accept a high street bank's terms by default. Here is a practical comparison of six options — three traditional high street banks and three digital challengers — to help you decide what suits your company.
Why your bank account choice matters
For a newly incorporated micro-entity or single-director limited company, the bank account is more than somewhere to receive client payments. It needs to connect to your accounting software, handle payroll payments if you run a PAYE scheme, and ideally make it easy to export transactions for VAT returns and year-end accounts. The right account saves time every month; the wrong one adds friction to tasks that should be straightforward.
There are a few questions worth thinking through before you compare options:
- Will you be handling cash regularly, or are all your transactions digital?
- Do you need branch access, or are you comfortable managing everything via an app?
- Does your accountant or bookkeeper need direct access to your account?
- Do you make or receive international payments?
- Which accounting software do you use — Xero, QuickBooks, FreeAgent, Sage?
High street banks
Lloyds Bank
Lloyds offers 12 months of fee-free everyday banking for new businesses, after which a monthly maintenance fee of £7 applies. Outgoing electronic payments are free for the first 100 per month, with a charge of 20p per transaction beyond that — a limit most small director-only companies will not reach. Cash deposits carry a fee of £0.85 per £100 at deposit machines or £1.50 per £100 over the counter, so Lloyds is not ideal if your business regularly handles cash. Deposits are fully FSCS-protected up to £120,000 and the account integrates with major accounting software. Branch access is available across England and Wales.
Barclays
Barclays also offers 12 months of free banking for start-ups, after which fees begin from £8.50 per month depending on turnover. Day-to-day transaction fees are broadly similar to Lloyds. Barclays has a slightly larger branch network and is often considered stronger on digital tools and international payment features — worth noting if you have any overseas clients or suppliers. FSCS protection applies in the same way as all licensed UK banks.
NatWest
NatWest's start-up account offers the longest free banking period of the three — 24 months — which makes it attractive for a newly incorporated company trying to keep early costs down. After that free period, a standard tariff applies: £0.35 per transaction across most payment types, including online transfers, direct debits, and standing orders, plus £0.95 per £100 for cash deposits or withdrawals. NatWest also offers free accounting software to business customers during the introductory period. FSCS-protected up to £120,000.
Online and digital banks
Tide
Tide is one of the UK's most widely used digital business accounts, serving over 1.5 million businesses. The free plan carries no monthly fee, with a charge of 20p per transaction after the first five each month. Paid plans start from £12.49 per month and unlock features like free transfers, expense cards, and priority support. Tide integrates with Xero, QuickBooks, FreeAgent, and Sage, and the onboarding process takes minutes. It also offers the option to incorporate your limited company directly through the app for £14.99, which is cheaper than the standard Companies House fee. Deposits are protected through ClearBank's e-money safeguarding arrangement, which is contractual rather than statutory FSCS coverage — worth being aware of if you plan to hold larger working capital balances.
1494 Group uses Tide. If you'd like to open a Tide account, you can use our referral code 2WNDOR when signing up. Please note this is a referral link — we may receive a benefit if you open an account using this code. Our recommendation is based on genuine use, not commission.
Starling Bank
Starling is widely regarded as the most complete free digital business account available in the UK. The standard GBP account carries no monthly fee, with no charge on everyday UK banking — Faster Payments, direct debits, and standing orders are all included at no cost. Cash deposits are possible via Post Office branches, with a free allowance of up to £3,000 per month — significantly more generous than some competitors. Starling integrates with all major accounting software and holds a full UK banking licence, meaning deposits are FSCS-protected up to £120,000 under the same statutory scheme as the high street banks. It is a strong default choice for most small limited companies operating primarily in GBP.
Revolut Business
Revolut received its full UK banking licence in March 2026, which means deposits are now FSCS-protected up to £120,000 — removing what was previously a significant drawback. The entry-level plan costs £10 per month and includes 10 free local transfers and £1,000 of free foreign exchange per month. The Grow plan at £30 per month raises those limits to 100 transfers and £15,000 of FX, which is more realistic for businesses with regular payment volumes. Revolut's core strength is multi-currency banking — it holds balances in over 25 currencies and converts at interbank rates within your plan allowance. For a UK-only business with straightforward domestic payments, the monthly cost is harder to justify against free alternatives like Starling. Where Revolut genuinely pulls ahead is for companies with international clients or overseas supplier payments.
Side-by-side comparison
| Bank | Monthly Fee | Free Period | UK Transfers | FSCS | Branch Access | Accounting Integration |
|---|---|---|---|---|---|---|
| Lloyds | £7 | 12 months | 100 free/month | ✓ | ✓ | ✓ |
| Barclays | £8.50+ | 12 months | Included | ✓ | ✓ | ✓ |
| NatWest | £0.35/txn | 24 months | £0.35/txn | ✓ | ✓ | ✓ |
| Tide | Free | Ongoing | 20p after 5 free | E-money* | ✗ | ✓ |
| Starling | Free | Ongoing | Free (unlimited) | ✓ | ✗ | ✓ |
| Revolut | £10 | None | 10 free/month | ✓ | ✗ | ✓ |
* Tide deposits are protected through ClearBank's e-money safeguarding, not statutory FSCS. Fees correct as at May 2026 — always verify current tariffs on each provider's website before opening an account.
Which should you choose?
There is no single right answer — it depends on what your business actually does.
If you want maximum simplicity at no cost, Starling is hard to beat. Free UK transfers, no monthly fee, full FSCS protection, and solid accounting integrations make it an excellent default for a straightforward UK-only limited company.
If you want to delay any banking costs while you get established, NatWest's 24-month free period gives you the longest runway before fees kick in — though the per-transaction tariff that follows is worth modelling against your expected payment volumes.
If you prefer digital banking with a referral benefit, Tide is a strong option. The free plan works well for low-volume companies, the onboarding is fast, and the accounting software integrations are reliable. If you hold significant working capital, note the difference in deposit protection structure versus a full banking licence.
If you have international clients or pay overseas suppliers, Revolut's multi-currency features justify the monthly fee in a way they simply do not for a domestic-only business.
If you want a high street bank, Lloyds is marginally cheaper long-term at £7 per month after the free period. Barclays is worth considering if you need stronger digital tools or international features. Both provide the reassurance of branch access if you ever need it.
A note for directors running a PAYE scheme: whichever bank you choose, make sure it supports same-day Faster Payments so PAYE and salary payments clear on time. All six accounts listed here support this — but it is worth confirming when you apply, particularly if you are setting up direct debits for HMRC payments on account.
One more thing — connect it to your accounting software
The most important step after opening your account is linking it to your bookkeeping software. Bank feeds that pull transactions in automatically save hours of manual data entry every month, and they make VAT return preparation significantly less painful. All six accounts in this comparison support feeds with the major platforms — Xero, QuickBooks, FreeAgent, and Sage — but check the specific integration before you commit, particularly if you use a less common provider.
If you are not yet using accounting software and are unsure where to start, speak to your accountant. The right software choice depends on the complexity of your accounts, your VAT status, and how hands-on you want to be with your own bookkeeping.
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From incorporation to your first set of accounts, we work with newly incorporated limited companies across the UK.
Get in TouchThis article is for general information purposes only and does not constitute financial advice. Bank fees and features change regularly — always verify current tariffs directly with each provider before opening an account. 1494 Group may receive a referral benefit if you open a Tide account using the code provided above.