Business Bank Accounts for Tradesmen

A straightforward guide to banking for UK trades

Whether you are a plumber, electrician, builder or decorator, how you handle money affects everything from cash flow to tax time. Many tradesmen ask if a business bank account is compulsory, or if using a personal account will do. The answer depends on how you are set up and what your bank allows. Limited companies must have a separate business account because the company is a distinct legal entity. Sole traders are not legally required to open one, but there are strong practical reasons to keep business and personal money apart.

This guide explains the rules in the UK, what to compare when choosing an account, the protection your money gets, and the costs that can quietly chip away at profit. We keep it clear and balanced so you can make a confident decision that fits how you actually work and get paid.

Good banking should make tax, invoicing and everyday payments easier, not harder.

Who this guide helps

If you work in the trades across Great Britain as a sole trader, a partner in a small partnership, or you run a limited company, this is for you. It is particularly useful if you regularly handle cash, stage payments, or subcontractor costs and want simple, reliable tools that keep your records clean and clients confident.

What a business bank account really is

A business bank account is a current account designed for trading activity. It lets you receive customer payments, pay suppliers and subcontractors, and track income and expenses separately from your personal spending. Limited companies and LLPs must use a business account because the business is a separate legal person. Sole traders can legally use a personal account if their bank permits it, but many providers state that accounts used mainly for business should be business accounts.

The difference shows up in the features. Business accounts often include invoicing tools, receipt capture, accounting integrations and options like overdrafts or savings spaces. Some banks charge monthly fees or transaction costs, while digital providers frequently offer low or no monthly fees and fast in‑app setup. For tradesmen, the best account is the one that aligns with how you take payments, how often you deposit cash, and how you manage your books.

How to choose and open the right account

Start by mapping your payment pattern. Do you receive mostly bank transfers, card payments or cash? Cash‑heavy trades should check cash deposit fees at branches or Post Offices. If you mostly invoice and get paid by transfer, look for strong invoicing, payment links and accounting integrations. Next, compare monthly fees, per‑transaction charges, ATM withdrawals and international payment costs if relevant.

Opening an account is straightforward when you prepare. Banks typically ask for proof of UK identity, address, and details about your trade, expected turnover and payment methods. Limited companies will also need Companies House details and information about directors. Digital‑first banks often let you apply in‑app and verify quickly, which suits busy tradespeople working on site.

FSCS protection matters too. Sole traders usually have a single combined FSCS limit with the same banking group across personal and business balances. Limited companies are separate legal entities, so the company can have its own protected limit in addition to your personal one. If you hold large balances for materials or payroll, consider how protection applies and whether to spread funds.

Why separation of money is worth it

Keeping business and personal finances apart saves time and stress. Clear separation makes bookkeeping simpler, reduces mistakes on tax returns and helps you spot deductible expenses. It supports Making Tax Digital practices and can smooth VAT and CIS admin for construction trades. Lenders also find trading histories easier to assess when your income runs through a dedicated account, which can help with future finance.

A separate business account can also lift your professional image. Invoicing from your trading name and receiving payments into a business account looks established and reliable to customers and larger contractors. For limited companies, a business account is non‑negotiable for clean records, accurate dividends and salaries, and building the company’s credit profile.

Bold but simple rule: keep the books clean and the rest gets easier.

Pros and cons at a glance

Costs and small print to watch

Account pricing varies widely. Some banks promote free banking for start‑ups for a limited period before standard fees begin. Check the total cost of how you actually bank: per‑transaction charges, ATM withdrawals, and in particular cash deposit fees that are often priced per £100 at branches or Post Offices. Digital accounts can be cost‑effective for everyday use but may charge for extras such as multi‑user access, advanced invoicing, or international payments. If you handle materials deposits or payroll, review overdraft availability and interest. Finally, read your current bank’s terms. Even if you are a sole trader, using a personal account mainly for business can breach conditions and risk restrictions or closure.

Alternatives if you are not ready to switch

1. Keep using a personal account with clear tagging and meticulous records if your bank permits business use.
2. Open a second personal account for clearer separation if allowed by your bank’s terms.
3. Use e‑money business accounts for interim needs, understanding they may have different protections to full UK bank accounts.
4. Combine a business savings pot with your current setup for tax set‑asides and materials reserves.
5. Introduce accounting software and receipt capture now, then switch to a full business account later.

Common questions, answered

Do sole traders legally need a business bank account?

No. Sole traders are not legally required to have one. However, many banks state that accounts used mainly for business should be business accounts. Separate banking also makes tax and bookkeeping easier.

Do limited companies have to use a business account?

Yes. A limited company is a separate legal entity, so you must run company finances through a business bank account, not a personal account.

How does FSCS protection work for business accounts?

FSCS protection applies to eligible UK bank accounts. For sole traders, personal and business funds at the same banking group are usually combined under one limit. For limited companies, the company typically has its own separate protected limit.

What documents will I need to open an account?

Expect photo ID, proof of UK address, and details about your trade, expected turnover and payment methods. Companies will need Companies House information and director details. Providers may also ask about cash handling to meet compliance checks.

Are digital‑first business accounts safe?

Yes, when the provider is a UK‑regulated bank your eligible funds are covered by FSCS. App‑based accounts can be opened quickly, include useful tools, and suit tradesmen who are often on site.

Quick comparison checklist for tradesmen

• Monthly account fee vs free period length
• Transfer, card and ATM charges you will actually use
• Cash deposit fees at branches or Post Offices
• Invoicing, payment links and receipt capture
• Accounting integrations and VAT or CIS support
• Overdrafts, savings spaces and interest on pots
• Multi‑user access and permissions for staff or bookkeepers

Next steps

• List how you get paid over a typical month.
• Shortlist three accounts that match those payment patterns.
• Check FSCS treatment for your structure and any large balances.
• Apply with documents ready to speed up approval.

How Switcha supports your choice

Choosing a bank should be simple. Switcha will connect you with the best options for what you are looking for, comparing fees, features and setup times side by side. We keep the process clear, transparent and focused on accounts that fit the way you work, so you can get back to the tools faster.

Important note

This guide provides general information for GB‑based trades and does not constitute financial or tax advice. Rules and fees change. Always check your provider’s terms and consider professional advice based on your specific circumstances.