Sole traders are not legally required to have a business account; only limited companies are. Most open one anyway, for two practical reasons: personal current accounts usually ban business use in their terms, and separating business money makes Self Assessment far quicker. Since April 2026 there is a third reason: Making Tax Digital now requires sole traders earning over £50,000 to keep digital records and file quarterly, and a dedicated account wired into MTD software is the least painful way to comply. The real question is not whether to open one. It is which one, and for most sole traders the answer is free.
At a glance · figures checked 4 July 2026
Account
Monthly fee
Best for
Cash deposits
Where it meters
Starling Bank
Free
Wanting a proper bank for nothing
Post Office, 0.7% (min £3)
No usage limits
Mettle
Free
Free bookkeeping thrown in
Not supported
No usage limits
Tide
Free plan
Freelancers who invoice a little
Post Office (min £2.50) or PayPoint (3%)
5 transfers, 3 invoices/mo
Monzo Business
Lite free
Tax discipline (on the £9 Pro plan)
PayPoint or Post Office, £1 per deposit
Invoicing & Pots need £9 Pro
ANNA Money
Pay As You Go free
Clients who pay late
PayPoint or Post Office, from 0.95%
Per-transaction fees
The shortlist, in order
01
Starling Bank
Free
Best overall: a real bank, free, with invoicing included
Limits
No usage limits
Invoicing
Free invoicing tools built in
Cash
Post Office, 0.7% (min £3)
Starling's dedicated sole trader account is the strongest default in 2026. No monthly fee, no UK transfer charges, free invoicing tools, tax-saving Spaces, and FSCS protection up to £120,000 because Starling is a licensed bank rather than an e-money app. The one weakness is cash: Post Office deposits cost 0.7% with a £3 minimum, capped at £20,000 a year, so a cash-heavy trade should read entry 05's alternative first.
Licensed UK bank. Eligible deposits protected up to £120,000 by the FSCS. Deposit cash at any Post Office for 0.7% of the amount, minimum £3. Sole trader accounts are capped at £5,000 per day and £20,000 per calendar year, so heavy cash businesses will hit the ceiling.
Best for bookkeeping: free FreeAgent worth £150+ a year
Limits
No usage limits
Invoicing
Basic invoicing free; quotes via Mettle+ at £4/month
Cash
Not supported
Mettle, run by NatWest, bundles full FreeAgent accounting free for as long as you make one transaction a month. FreeAgent files MTD quarterly updates, so this single free account can replace a paid software subscription. The dealbreaker is cash: Mettle takes none at all.
Provided by National Westminster Bank plc trading as Mettle. Eligible deposits protected up to £120,000 by the FSCS. Mettle does not take cash deposits. If you handle cash at all, pick Starling, Tide or Zempler instead.
Tide's free plan includes 3 invoices and 5 free transfers a month, which suits a freelancer with a handful of steady clients. Go past those limits and the maths changes: paid plans start at £12.49, and the Xero connector needs one. Where Tide shines is the start line, registering a limited company for £14.99 if you later incorporate.
E-money institution, not a bank. Accounts powered by ClearBank carry FSCS protection up to £120,000; accounts powered by PPS are safeguarded instead. Tide confirms which applies when you open the account. Post Office deposits cost £2.50 up to £500, then a percentage of the excess (0.99% on the free plan, 0.5% on paid plans). PayPoint costs 3% of the deposit, £10 minimum, £500 daily maximum.
Monzo's Tax Pots skim your tax percentage off every payment the moment it lands, which is the single best cure for the classic sole trader mistake of spending the tax money. Be clear about the price: Tax Pots, invoicing and accounting integrations all sit on the Pro plan at £9 a month, not the free Lite plan. The first month of Pro is free, so you can test whether the automation earns its fee.
Licensed UK bank. Eligible deposits protected up to £120,000 by the FSCS. £1 flat fee per deposit at PayPoint or the Post Office. Monthly deposit limits: £3,000 for sole traders, £10,000 for limited companies.
ANNA chases unpaid invoices automatically, with polite and then progressively firmer reminders, and its Pay As You Go plan has no monthly fee. It is e-money rather than a bank, so keep the big reserves elsewhere, but as a working account for an admin-averse freelancer it does the most for the least.
E-money account. Funds are safeguarded under the Electronic Money Regulations, not FSCS-protected. ANNA's separate savings pots are provided by Griffin Bank with FSCS cover. Deposit via PayPoint or Post Office. On Pay As You Go it costs 0.95% of the amount; paid plans include some free deposits. Limits: £1,000 a day, £10,000 a month.
Watch out: Revolut Business has no free plan in the UK. Plans start at £10 a month and the Grow tier rose to £35 in February 2026. For a cost-sensitive sole trader the five accounts above make more sense unless you invoice heavily in foreign currencies.
How to choose in four questions
Do you handle cash? If yes, you need a Post Office deposit route: Starling (0.7%, min £3) or Zempler (0.55%, min £4) work; Mettle takes no cash at all. If no, skip this question entirely.
What is your biggest admin drain? Invoicing a few clients: Tide or Starling. Forgetting to set tax aside: Monzo Pro's Tax Pots. Bookkeeping and filing: Mettle's free FreeAgent. Late payers: ANNA.
Licensed bank or e-money? For day-to-day balances either is fine. For larger sums, favour FSCS protection up to £120,000: Starling, Mettle and Monzo have it on every account, Tide only on its ClearBank-powered accounts, ANNA not on the main account.
Which software do you already use? Check the integration before committing. Starling and Mettle connect to the big three free; Tide holds Xero back for paid plans; Monzo needs Pro.
Sole trader accounts and Making Tax Digital, briefly
MTD for Income Tax stopped being a future problem in April 2026. If your qualifying income, meaning gross self-employment and property income before expenses, was over £50,000 in the 2024 to 2025 tax year, HMRC already expects digital records and quarterly updates from you. The £30,000 band joins in April 2027, and £20,000 is scheduled after that, so most full-time sole traders will be inside MTD within two tax years. Every account on this page can feed MTD-compatible software; Mettle and Starling do it with no subscription, which is why they sit at the top of the list.
Sole trader versus limited company accounts
A sole trader account is opened in your own name as a self-employed individual. A limited company account is opened in the company's name and becomes a legal necessity once you incorporate, because the company's money is not yours. Sole trader accounts open faster, often in minutes with only an ID check, and more of them are free. If incorporation is on your horizon, note that Starling requires a fresh application for its business account, while Tide can register the company for £14.99 and switch you over inside one app. Our new business guide covers that moment properly.
Questions people actually ask
Can I use my personal account as a sole trader?
Legally yes, but most banks ban business use in their personal account terms, and mixing money makes Self Assessment slower and messier. A separate free account fixes both problems for nothing.
Are business accounts free for sole traders?
Yes. Starling's sole trader account, Mettle, Monzo Lite, Tide's free plan and ANNA Pay As You Go all have no monthly fee. You typically pay only for cash deposits and, on some accounts, per-transaction or premium features.
Do I need a business account for Making Tax Digital?
Not strictly, but MTD for Income Tax has applied since April 2026 to sole traders and landlords with qualifying income over £50,000, and the threshold falls to £30,000 in April 2027. A dedicated account feeding MTD-ready software makes the quarterly updates far simpler.
How long does it take to open a sole trader account?
Usually 5 to 15 minutes to apply with an ID check, and the app-based providers often approve the same day. There is no Companies House step because you are not a company.
Is my money protected in these accounts?
It depends on the provider. Licensed banks such as Starling, Monzo and Mettle carry FSCS protection up to £120,000, the limit since December 2025. E-money providers such as ANNA safeguard your funds instead; Tide accounts powered by ClearBank do carry FSCS cover.
Figures checked 4 July 2026; confirm details with the provider before applying. We may earn a commission through links on this page.