How to Open a Business Bank Account in the UK

Why a limited company legally needs its own account

A limited company is a separate legal entity. That is the whole point of incorporation: the company owns its assets, owes its debts, and enters contracts in its own name. GOV.UK states that because the company is a separate legal entity, there must be a clear division between the company's finances and those of the owners and directors. Mixing the two undermines the limited liability protection that made you incorporate in the first place.

Because of that separation, a limited company must have a business bank account. GOV.UK guidance for businesses confirms that certain types of business, such as limited companies, must have a business bank account, and that the company's banking must be kept separate from personal banking. Running company income and expenses through a personal current account creates messy records, weakens the corporate veil, and makes your annual accounts and Corporation Tax far harder to prepare.

The position is different for sole traders and partnerships. MoneyHelper explains that if you are a sole trader or in a partnership you do not need a business bank account, but you might still find it useful for keeping business and personal finances apart. So the legal requirement is specific to the limited company structure, and it flows directly from the company being its own legal person.

There is a practical dimension too. When money owed to the company sits in a director's personal account, it can look like the director has taken it out, which creates confusion at year end and can raise questions about directors' loans and tax. A dedicated business account gives you a clean, single record of everything the company received and paid, which your accountant will thank you for and which makes any future audit or lender review far simpler. In short, the separation is both a legal duty and a sensible way to run the finances.

What you need to open a business bank account

Every provider runs its own checks, but the core documents are broadly consistent because banks must verify who you are and who ultimately controls the company. For a limited company you will be asked for your Companies House registration documents and certificate of incorporation, along with your company registration number, incorporation date and registered address.

You will also need to identify and verify the people behind the company. That means personal identification and proof of address for the directors, and details of anyone with significant control (PSC). A person with significant control is generally anyone who holds more than 25 percent of the shares or voting rights, and those details are confirmed when you register the company with Companies House. Providers use this information to complete anti money laundering and know your customer checks before opening the account.

Expect to give basic business information too, such as your legal and trading names, a description of what the business does, its trading address, expected turnover, and how you plan to use the account. Having everything to hand before you apply is the single easiest way to speed the process up.

It is worth making sure the details you give match the public record exactly. The registered address, company name and director information a provider sees on the Companies House register need to line up with what you submit, because any mismatch can stall the checks. If you have recently changed a director or moved your registered office, confirm those updates have gone through at Companies House before you start the banking application.

How to open a business bank account, step by step

The process is straightforward once the company is registered. Most providers now let you apply online, and many can open an account within a few working days if your documents are in order. The steps below cover the usual path for a newly incorporated limited company.

Bear in mind that some banks only offer full business accounts to businesses that have been trading for at least a year, and may steer very new companies towards a start up account first. It is worth checking eligibility before you invest time in an application.

Bank account or e-money account: know the difference

Not every provider that offers a business account is a bank. Many popular digital providers are electronic money institutions (EMIs) or authorised payment institutions (APIs) rather than banks, and the way your money is protected is fundamentally different. This is the single most important distinction to understand before you commit.

Money held with a UK authorised bank, building society or credit union is covered by the Financial Services Compensation Scheme. E-money and payment firms are not covered by FSCS. As the FCA puts it, if your non-bank payment provider goes out of business, your money will not be protected by the Financial Services Compensation Scheme. FSCS says plainly that it cannot protect the money you hold with e-money institutions and payment providers.

Instead of FSCS cover, EMIs and APIs must protect customer funds through safeguarding. The FCA explains that they must either place your money in a separate safeguarding account with a bank, or protect it with an insurance policy or a comparable guarantee. That gives a meaningful layer of protection, but it is not the same as FSCS: if the firm fails, the FCA notes that funds may take time to receive and might not be returned in full, because some costs can be taken by the administrator or liquidator. Neither option is automatically better; a digital e-money account may offer faster onboarding and features you want, while a bank account offers FSCS deposit protection. The point is to choose with your eyes open. Many businesses use a bank as their main deposit account and add a payment provider for specific tasks, keeping the trade offs deliberate rather than accidental. Whichever you pick, make sure it can handle the ways you actually get paid and pay others.

How FSCS deposit protection works

If you choose a bank, building society or credit union, your deposits are protected by FSCS up to a set limit. On 1 December 2025 that limit rose to £120,000 per eligible person, per authorised firm. The previous limit of £85,000 had applied from 30 January 2017 to 30 November 2025. Joint accounts are protected up to the same £120,000 limit per eligible person.

There is extra cover for temporary high balances. FSCS protects certain qualifying temporary high balances up to £1.4 million for six months from the date the money was first deposited, which is designed to cover life events such as selling a property or receiving an inheritance. If a firm fails, FSCS aims to pay compensation within seven working days, though more complex cases can take longer.

One practical point for businesses holding larger balances: the limit applies per authorised firm, not per account. If you hold money across several brands that share a single banking licence, the £120,000 limit applies to the combined total, not to each brand separately. Spreading larger balances across genuinely separate authorised firms is how some businesses keep more of their cash within protected limits.

Choosing the right account for your company

Start with what your business actually needs. Consider fees and monthly charges, the number of free transactions, cash and cheque handling if you take physical payments, integration with your accounting software, invoicing tools, and the quality of support you can reach when something goes wrong. MoneyHelper recommends comparing different business accounts to find the one that suits you, because features vary widely between providers.

Then weigh protection against convenience. If holding your working capital under full FSCS deposit protection matters to you, a bank account is the clear route. If you value rapid onboarding, modern apps and specific payment features, a well run e-money provider may suit you, provided you understand that your funds rely on safeguarding rather than FSCS. Many businesses use a bank as their main account and a payment provider for specific tasks, keeping the trade offs deliberate.

Whatever you choose, keep the golden rule from GOV.UK in mind: your company banking must stay separate from your personal banking, because the company is a separate legal entity. Clean separation protects your limited liability and makes your year end far less painful. See our pricing to get your company and its finances set up correctly from the start.

Conclusion

Opening a business bank account is a legal requirement for a limited company because the company is a separate legal entity whose money must be kept apart from the owners and directors. Get your certificate of incorporation, director identification, proof of address and PSC details together, compare providers on both features and protection, and the application itself is usually quick.

Above all, understand what stands behind your money. A bank account carries FSCS deposit protection, currently £120,000 per eligible person per authorised firm since 1 December 2025, while an e-money or payment account is protected by safeguarding rather than FSCS. Neither is automatically the wrong choice, but you should choose knowing exactly how your funds are protected. Do that, keep business and personal finances cleanly separated, and your company starts on a solid footing.

Frequently asked questions