A practical guide for UK financial advisers on choosing compliant, FSCS-aware business bank accounts, weighing traditional banks against digital challengers, fees, features and switching options.
Setting the scene
For UK financial advisers, the right business bank account is more than a place to park cash. It supports clean records for Companies House and HMRC, underpins FCA obligations when handling client money, and strengthens professional credibility with clients and auditors. While sole traders are not legally required to open a separate business account, it is strongly encouraged for clear bookkeeping and to avoid breaching personal account terms. For limited companies, a distinct account is essential because the company is a separate legal entity.
Today’s market spans familiar high street names and digital-first challengers. Traditional banks can offer relationship managers, lending and full-service support. Digital providers focus on low fees, rapid onboarding and smart tools like built-in invoicing and accounting integrations. Your decision should reflect how your firm operates - from the need for FSCS protection to the way you collect fees, manage multi-currency flows and collaborate with your bookkeeper.
No jargon, no pressure - just practical guidance so you can pick an account that fits the way your practice really works.
Who this helps
This guide is for UK-based independent financial advisers, wealth managers and planning firms, whether you are a sole trader, a limited company director or running a multi-adviser practice. If you are weighing traditional banks against app-first options, considering FSCS coverage, or trying to cut admin with digital tools, you will find clear, actionable pointers here.
What it actually is
A business bank account is a current account used exclusively for your firm’s income and expenses. Limited companies must use one to keep business and personal finances separate. Sole traders can legally use a personal account, but many banks prohibit business use in personal terms, and separate accounts make tax and cash-flow management far easier. If you hold client money, you may also need a dedicated client money account in line with FCA expectations.
Most fully licensed UK banks provide business current accounts covered by the Financial Services Compensation Scheme. Eligible business deposits are protected up to £120,000 per banking group. For sole traders, that limit applies across both personal and business balances at the same institution. For limited companies, the company’s £120,000 protection is separate from the owners’ personal protection. Some app-based providers operate e-money accounts rather than full bank accounts, so FSCS does not apply and different safeguarding rules are used.
How to set one up well
Start with a short list. Map your needs - volume of UK payments, international transfers, cash or cheque handling, accounting integrations and multi-user access. Then compare monthly fees, transaction charges and any free banking periods. Digital challengers like Starling often charge £0 monthly with strong mobile tools, while high street banks may offer up to 12 months’ free banking for eligible startups before standard fees begin.
When applying, expect to provide proof of identity, proof of address, company registration details and evidence of trading. Digital providers can onboard quickly via apps, while traditional banks may take longer but can offer a relationship manager and broader lending products. If you are switching from another account, check whether your chosen provider supports the Current Account Switch Service to move direct debits and standing orders with minimal disruption.
Keep client and firm funds separate at all times - strong segregation protects both compliance and trust.
Why your choice matters
Choosing the right provider affects day-to-day efficiency and risk. FSCS protection offers peace of mind for eligible deposits at fully licensed banks - useful when holding operating reserves or tax pots. Low-fee, app-first accounts can reduce admin through real-time notifications, automated expense categories and integrations with Xero, QuickBooks or FreeAgent. For firms with international clients or overseas investment flows, multi-currency accounts and transparent FX can materially reduce costs.
Traditional banks bring breadth: overdrafts, term loans, merchant services, foreign currency accounts and sector-aware support. Digital platforms excel at speed, usability and transparent pricing. The best fit depends on whether you value relationship banking for complex needs or a lean, digital toolkit for streamlined operations. Either way, clarity on fees, FSCS status and client money handling should guide your decision.
At-a-glance: strengths and trade-offs
| Pros | Cons |
|---|---|
| Clear separation of business and personal funds | Monthly account fees after any free period |
| Supports compliance for companies and client money | Charges for cash deposits and certain transactions |
| FSCS protection at fully licensed banks up to £120,000 | Not all digital providers offer FSCS cover |
| Digital tools cut admin and improve visibility | Limited in-branch services with app-only providers |
| Switching services reduce disruption | Lending and complex services may require traditional banks |
Watch the detail
Not all business accounts are created equal. Check whether your provider is a fully licensed UK bank with FSCS protection or an e-money institution using safeguarding. If FSCS is essential to your risk policy, filter for licensed banks. Understand fee schedules in full - many accounts introduce charges of around £8 to £10 per month after promotional periods, and extra costs can apply for international payments, cash deposits and some electronic transactions.
Consider how you actually collect income. If your firm runs cashless with direct debit, bank transfer or card payments, a digital account could be simpler and cheaper. If you still receive cheques or handle cash for legacy cases, ensure practical deposit routes via the Post Office or partner networks and factor in per-transaction or percentage fees. Finally, if you deal with overseas clients, compare multi-currency options and FX margins. Transparent rates can materially improve your net position.
Alternative routes you could take
- Keep your existing bank but open a separate business account on a tariff that suits your transactions.
- Use a digital business account for daily operations and a high street bank for lending and complex needs.
- Add a dedicated client money account where required to ring-fence client funds.
- Open multi-currency accounts or wallets for EUR and USD if you receive or pay in foreign currencies.
- Switch via the Current Account Switch Service to minimise admin and reduce errors.
FAQs
Q: Do I legally need a business account as a sole trader? A: Not by law, but it is strongly recommended. It avoids breaching personal account terms, simplifies tax and presents a more professional record to HMRC and clients.
Q: How does FSCS protection apply to business accounts? A: Eligible business deposits at fully licensed UK banks are protected up to £120,000 per banking group. Sole traders share this limit across personal and business balances at the same bank.
Q: Are e-money accounts safe if they are not FSCS protected? A: E-money institutions must safeguard client funds in segregated accounts. This is different to FSCS compensation. Many firms prefer FSCS for its statutory protection and clarity.
Q: What typical fees should I expect after any free period? A: Many providers charge around £8 to £10 per month, with additional fees for cash deposits, international transfers and some electronic transactions. Always review the tariff.
Q: Which is better for advisers - traditional or digital? A: It depends. Traditional banks suit firms needing lending, branch access and relationship support. Digital providers often win on price, speed, multi-currency and accounting integrations.
How Switcha fits in
Switcha will connect you with the best options for what you are looking for, whether that is FSCS-protected banking, low fees, digital tools or multi-currency support. We compare providers side by side, so you can choose a business account that aligns with your firm’s size, payment flows and growth plans without the legwork.
Important note
This guide offers general information, not personal advice. Banking eligibility, fees and features can change, and FSCS or safeguarding rules may vary by provider. Always check current terms and seek professional guidance where you have specific regulatory or client money obligations.
Next steps: shortlist three providers, confirm FSCS status, compare fees and features, and use the switch service to minimise disruption.
Get smarter with your money
Join thousands of people in the UK who are taking control of their financial future
FAQs
Common questions about managing your personal finances
Begin by tracking every expense for one month. Use an app or spreadsheet. No judgment. Just observe your spending patterns.
Cancel unused subscriptions. Cook at home. Compare utility providers. Small changes add up quickly.
Aim for 20% of your income. Start smaller if needed. Consistency matters more than the amount.
Choose reputable apps with strong security. Read reviews. Check privacy policies. Protect your financial data.
Pay bills on time. Keep credit card balances low. Check your credit report annually. Be patient.
Still have questions?
Our team is ready to help you navigate your financial journey
More financial insights
Explore our latest articles on personal finance and money management
