Business Bank Account Fees Explained

A plain-English tour of business banking costs

Running a business means keeping a close eye on money in and money out. Banking is part of that. In the UK, you can choose from a wide range of business accounts, from free digital options to paid plans with extra features. Knowing what you are paying for - and what you can avoid - helps you keep costs down without risking day-to-day operations. This guide breaks down common fees, what influences them, and how to compare accounts like a pro.

Free business bank accounts are now widely available from digital providers, especially for sole traders and micro-businesses. Traditional high-street banks often charge a monthly fee, though some offer fee-free introductory periods. Importantly, many charges are tax deductible, and switching is easier than most people expect. With a little structure and a few checks, you can pick an account that suits your volume of payments, cash handling, and growth plans.

Clarity first: simple, predictable fees beat complex pricing every time.

Who is this for?

If you trade in the UK and want to manage costs without compromising reliability, this is for you. Sole traders, freelancers, partnerships, and limited companies will find practical, balanced guidance. Whether you are opening your first account or reviewing what you pay today, you will learn how to spot the right features, understand typical charges, and switch with confidence.

What actually counts as a fee?

Business bank account charges usually fall into two buckets: fixed monthly fees and usage-based fees. Monthly fees range from £0 with many digital banks to £20 or more with high-street providers. Paid tiers tend to include higher transaction limits, potential overdraft access, or priority support. Some banks offer fee-free periods for new customers, which can help you test the service without long-term commitment.

Usage-based fees include card payments, bank transfers, cash deposits, and international payments. These can add up quickly if your business has high transaction volumes or handles a lot of cash. Digital banks often lead on transparent, lower transaction pricing, while traditional banks may have more complex schedules and additional costs for exceeding limits. Interest on business accounts is typically low, so parking large balances in standard current accounts may not deliver meaningful returns. Where appropriate, look at savings or fixed-term options offered to businesses.

How to compare and cut the costs

Start by mapping your monthly activity: the average number of incoming and outgoing payments, card transactions, cash deposits, and any international transfers. With this profile, shortlist accounts that match your typical usage. Then plug your numbers into each provider’s pricing to see your likely monthly cost, not just the headline fee.

Prioritise providers that publish clear, simple fee tables and make it easy to track charges in-app. For cash-heavy businesses, pay special attention to deposit fees and where you can pay in. For card-heavy or online-first businesses, focus on domestic transfer costs, card processing integrations, and any caps or waivers. Remember that business banking charges are usually allowable expenses for tax, reducing the net cost. Finally, the Current Account Switch Service can move your balance, payees, and incoming payments in around seven working days for eligible businesses, so you are not locked in.

Standout tip: calculate your total cost per month using your actual volumes, then add a small buffer for growth.

Why these details matter

Small differences in price can compound. A few pence per transaction seems minor until you multiply it by hundreds of payments each month. The same goes for cash deposit fees or international transfers. Choosing the right account helps protect margins and creates more predictable costs, both essential for planning and cash flow.

There is also a safety angle. Eligible business deposits are protected by the Financial Services Compensation Scheme up to £85,000 per banking group. Spreading funds across more than one institution can add resilience if you hold larger balances. Finally, many providers offer easy upgrades, so you can start with a free or low-cost plan, then switch tiers as your needs grow without changing bank details.

Weighing it up

Watchpoints before you sign up

Before opening an account, read the fee schedule line by line. Look for limits on free transfers, charges for Faster Payments, and any cost for receiving international funds. If your business handles cash, check the per-deposit fee, where you can deposit, and whether there is a per-transaction or percentage-based charge. Some providers partner with Post Office or PayPoint for cash, each with different pricing.

Assess the value of paid extras like accounting integrations, multi-user access, or overdrafts. If you will not use them, a free or lower-tier plan may be smarter. Consider customer support, too - app chat may be fine for routine tasks, but phone support can be valuable during busy periods. Finally, confirm how interest is handled. If you keep larger surpluses, look at business savings or notice accounts to improve returns without compromising access.

Sensible alternatives to consider

1. Free digital business accounts - start with £0 monthly fees and upgrade later.
2. Paid tiers from digital banks - predictable cost for higher limits and features.
3. High-street business accounts - branch access and cash services if you need them.
4. Business savings or fixed-term deposits - move surplus cash to earn more interest.
5. Multiple accounts strategy - separate tax, reserves, and operating spend across providers.
6. Merchant account integrations - reduce total payment costs if you process many card sales.

Your questions answered

Are business banking fees tax deductible in the UK?

Yes. Most monthly and transaction charges are allowable business expenses. Keep clear records and include them when you prepare your accounts to reduce your taxable profit.

Do free business accounts really exist?

They do. Several UK digital providers offer £0 monthly-fee accounts with core features for sole traders and small companies. You can usually upgrade as your transaction volumes or needs grow.

How much should I budget each month?

Typical monthly fees range from £0 to £20+, but the real driver is usage. Add expected transaction, cash deposit, and international charges to get your total monthly cost.

Is switching business accounts risky?

It is designed to be low risk. The Current Account Switch Service moves payments and balance for eligible businesses in around seven working days, with a guarantee that redirects payments sent to your old account.

How safe is my business money in the bank?

Eligible deposits are protected by the FSCS up to £85,000 per banking group. If you hold more than that, consider spreading funds or using business savings products across different institutions.

Next step: list your average monthly transactions, then compare three providers side by side using your real numbers.

How Switcha can help

Switcha focuses on clarity. We help you compare UK business accounts based on your actual volumes, fee sensitivities, and preferred features. Switcha will connect you with the best options for what you are looking for, highlighting total monthly cost and ease of switching so you can make a confident, informed choice.

Sensible small print

This guide is for general information only and is not financial advice. Fees, features, and eligibility can change. Check each provider’s current terms before applying, and consider professional advice where your circumstances are complex.