A clear, UK-focused guide to business savings accounts, smarter rates, FSCS protection, and how to switch for stronger returns before rates fall further.
Put idle business cash to work
Many UK firms still leave surplus cash sitting in low-paying accounts. Across the country, hundreds of billions of pounds earn modest returns, with many instant access balances at big high street banks paying as little as 0.1%. Meanwhile, leading business savings rates have reached around 4.10% recently. That gap adds up fast: businesses collectively forgo hundreds of millions in interest each year by sticking with default accounts.
Rates fell through 2025 and are expected to keep drifting lower into 2026 as the Bank of England base rate trends towards 3.50%. Waiting could mean accepting smaller returns later. The good news is that switching is straightforward, and safeguards like the Financial Services Compensation Scheme (FSCS) help you manage risk. With a plan, you can boost interest, protect your cash, and keep access when you need it.
Who benefits most
If you are a UK sole trader, micro business, or SME that holds regular operating cash, tax reserves, or project funds in a current or low-rate deposit account, this guide is for you. It is especially useful if you lean on personal savings for cash flow, or if you bank only with your main provider. A few practical changes can strengthen your cash position without taking on market risk.
What business savings really are
A business savings account lets you earn interest on company money while keeping it separate from day-to-day spending. Options typically include easy access accounts for flexibility, notice accounts that require advance withdrawal requests, and fixed-term bonds that lock funds for a set period in exchange for higher rates. Providers can change variable rates quickly, so it pays to review them often.
Protection matters. Most UK businesses get FSCS coverage up to £120,000 per banking licence. Accounts held with different brands under the same licence share that single limit. Sole traders should note that personal and business balances sit under the same cap with the same firm. Larger reserves can be split across separate licences to stay protected while targeting stronger rates.
How to set up for better yields
Start by mapping your cash: ring-fence an operating float for everyday bills, set aside predictable near-term outgoings like VAT and payroll, and identify reserves you will not need for several months. Match each pot to an account type. Keep your core float in easy access, place mid-term money in a notice account, and consider fixed terms for funds that are genuinely spare.
Check the effective annual rate, not just headline bonuses that may expire. Confirm how interest is calculated and paid, and how withdrawals work. If you hold material balances, spread them across multiple licences to remain within FSCS protection. For falling-rate environments, many businesses blend terms to smooth risk: some easy access for liquidity, some notice for balance, and a ladder of fixed terms to lock higher rates without losing all flexibility.
Why acting now makes sense
The gap between average business returns and the best available rates is meaningful. Companies with substantial cash can add thousands in yearly interest by moving from low-rate accounts to competitive ones. This extra yield strengthens working capital and reduces reliance on personal savings, credit cards, or short-term borrowing when cash is tight.
With lending to SMEs subdued in recent years and base rates expected to drift lower, there is a window to secure stronger fixed rates before they decline. Even partial moves help: shifting only longer-dated reserves into higher-yield accounts can materially lift returns while keeping day-to-day access intact. A simple, disciplined approach can deliver steady gains without complicating your banking.
Upsides and trade-offs at a glance
| Pros | Cons |
|---|---|
| Higher interest than current accounts | Notice periods or fixed terms reduce flexibility |
| FSCS protection up to £120,000 per licence | Multiple brands may share one licence, limiting protection |
| Clear separation of operating cash and reserves | Bonus rates can drop after intro periods |
| Wide choice across challenger and established banks | Rates on variable accounts can change quickly |
| Simple to open and manage online | Transfers can create brief settlement delays |
Keep liquidity first, then optimise yield around it.
Watchpoints before you switch
Confirm the banking licence behind each brand so you do not accidentally stack balances under one FSCS cap. If you are a sole trader, remember your personal and business savings with the same provider share the same £120,000 limit. Review withdrawal rules carefully: notice accounts can require 30, 60, or 95 days’ notice, and early access might not be allowed. For fixed terms, check what happens at maturity and how you give reinvestment instructions.
Variable rates can be cut at short notice. Introductory or bonus rates may lapse after a set period, so set calendar reminders to review them. Make sure payment rails fit your needs, such as Faster Payments for same-day moves and daily transfer limits that suit your cash cycles. Finally, ensure your accounting processes can track multiple accounts cleanly so reconciliations remain simple and audit-ready.
Other places to park short-term cash
- Money market funds - Professional cash vehicles offering diversified short-term instruments; values can fluctuate slightly and fees apply.
- Short-dated gilts and Treasury bills - Government-backed securities held to maturity for known returns, with market price movements before maturity.
- Offset business mortgages - Savings reduce interest on borrowing; benefits depend on your loan terms and lending rates.
- Sweep features on business current accounts - Automate transfers from current to savings above a threshold to keep cash productive.
- Credit union or building society business accounts - Community-focused options with competitive rates in some regions and niches.
Frequently asked questions
Q: How much of my business savings are protected? A: Most UK businesses get FSCS protection up to £120,000 per banking licence. Check the legal entity and licence details for each provider you use.
Q: Are easy access accounts worse than fixed terms? A: Not necessarily. Easy access prioritises flexibility and can still pay competitive rates. Fixed terms usually pay more but lock funds. Many firms use a blend.
Q: What if rates fall after I open an account? A: Variable accounts can be cut at any time. Fixed terms lock the rate for the term. Splitting funds across both can manage this risk while keeping liquidity.
Q: Does switching hurt my day-to-day banking? A: No. You can keep your main current account while opening separate savings accounts for surplus cash. Transfers via Faster Payments are typically quick and simple.
Q: How often should I review my rates? A: Check quarterly at minimum, or sooner if a bonus ends or the market moves. Set diary reminders around term maturities and known cash flow peaks.
How Switcha fits into your plan
Switcha will connect you with the best options for what you are looking for, from easy access to fixed terms. We keep it simple: compare current market rates, highlight FSCS considerations, and help you decide how to balance access with returns. No pressure, just clear guidance to make your cash work harder.
Important information
This guide is for general information only and is not financial advice. Interest rates and protections can change. Check details with each provider and consider independent advice for your circumstances before making decisions.
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