Whether you’re planning a big purchase or just putting money to one side for a rainy day, opening a business savings account can help you to reach your goals.
Read our guide for more information on how business savings accounts work, plus a comparison of accounts from some leading providers.
What is a business savings account?
Much like personal savings, business savings allow you to separate your surplus cash and build up a useful pot of money.
By opening a savings account for your business, you can benefit from higher interest rates and the peace of mind that you’ve got some extra cash available if you need it.
Depending on the type of account you choose, you may be able to access your savings instantly. Alternatively, some accounts will give you fewer options to access your cash but you’ll benefit from the best business savings rates.
Most banks that provide business current accounts also offer savings options so it’s worth checking with your existing provider as well as shopping around for the best interest rates.
Read more: Which bank has the best business bank account?
Why should businesses open a savings account?
Saving regularly is a healthy habit that can contribute towards the growth of your business. Having a dedicated savings account for your business can encourage you to set goals, such as building up the money for:
- hiring a new employee
- upgrading software or equipment
- expanding your premises
- launching new products or services
- improving your website or marketing
If you run a limited company, it’s a legal requirement to keep your business and personal finances separate. This means that if you’re saving any of the money made by your business, it’ll need to be in a separate business account.
Although separating business and personal finances isn’t a legal requirement for sole traders and freelancers, it’s highly recommended if you want to manage your money effectively.
Read more: What is a sinking fund? A small business guide
What are the different types of business savings account?
As mentioned above, there are several types of savings accounts that offer different levels of access to cash and interest rates.
Here are the three main types of savings accounts for businesses:
- Easy access – no restrictions on withdrawing cash, which means the interest rate will be lower than other savings accounts
- Notice – as the name suggests, you’ll need to give notice before removing funds from this type of account
- Fixed rate – you won’t be able to access your money for a set period, but will benefit from the best business savings rates
When choosing your savings account, it’s important to consider how often you’ll need to access the money and whether they’ll be expected withdrawals or on a more ad-hoc basis.
Easy access: ten of the best business savings accounts
Bank | Account name | Interest rate | Minimum deposit | Extra info |
Virgin Money | 1.41% | £1 | No fees and charges | |
Barclays | Up to 1.56% | £1 | Unlimited CHAPS payments | |
Shawbrook | 2.26% | £1,000 | Max balance of £85,000 | |
Aldermore | 2.30% | £1,000 | Max balance of £1,000,000 | |
Santander | 0.7% | £1 | No max balance | |
Lloyds Bank | 0.75% | £1 | Interest paid monthly | |
NatWest | 1.06% | £1 | No max balance | |
Metro Bank | 0.75% | £1 | Interest paid monthly or annually | |
Nationwide | 0.35% | £5,000 | Interest paid monthly or annually | |
Newcastle Building Society | 2.30% | £1 | Different options for limited companies and sole traders |
*All account information in this article is correct as of May 2023, but subject to change
Notice: ten of the best business savings accounts
Bank | Account name | Interest rate | Minimum deposit | Withdrawal notice period |
Virgin Money | 2.78% | £100,000 | 95 days | |
Shawbrook | 1% | £5,000 | 100 days | |
Bank of Scotland | 1.87% | £10,000 | 32 days | |
United Trust Bank | 3.75% | £5,000 | 200 days | |
Cambridge & Counties Bank | 3.45% | £10,000 | 95 days | |
Lloyds Bank | 1.87% | £10,000 | 32 days | |
NatWest | 2.12% | No minimum deposit | 95 days | |
Metro Bank | 1.65% | No minimum deposit | 35 days | |
The Co-operative Bank | 1.96% | N/A | 95 days | |
Newcastle Building Society | 2.50% | £1 | 60 days |
Fixed rate: ten of the best business savings accounts
Bank | Account name | Interest rate | Deposit/balance limits | Fixed term |
Virgin Money | 4.10% | £2,000,000 (max balance) | 2 years | |
Barclays | Depends on chosen term | £24,999,999 (max balance) | Up to 1 year | |
Shawbrook | 4.05% | £2,000,000 (max balance) | 1 year | |
Aldermore | 3% | £1,000,000 (max balance) | 1 year | |
Santander | 1% | £5,000,000 (max balance) | 1 year | |
Lloyds Bank | 3.06% | £5,000,000 (max balance) | 9 months | |
NatWest | Agreed on opening of account | £100,000 (minimum deposit) | Up to 5 years | |
Metro Bank | 3.51% | £5,000 (minimum balance) | 1-2 years | |
United Trust Bank | 4.16% | £5,000 (minimum balance) | 15 months | |
Cambridge & Counties Bank | 4.15% | £10,000 (minimum balance) | 2 years |
Do challenger banks offer business savings accounts?
In recent years, a number of challenger banks have started to compete with more established high street banks.
Most challenger banks are online-only, with a focus on improving user experience.
When it comes to business savings accounts, Monzo offers its customers an instant access business savings account with an interest rate of 1.5 per cent.
Starling offers a fixed rate account, with an interest rate of 2.5 per cent on a one-year fixed term.
Meanwhile, Tide customers can open ‘sub-accounts’ within their existing business bank account to separate their surplus cash.
More small business finance guides
- How to budget: a budget calculator and guide for the self-employed
- What is asset finance?
- What is zero-based budgeting?
- How much business insurance do I need?
Business banking can be a complex topic and this article is intended as a guide only. Make sure you seek advice from a banking or finance expert if you’re not sure of anything.
Looking for self-employed insurance?
With Simply Business you can build a single self employed insurance policy combining the covers that are relevant to you. Whether it’s public liability insurance, professional indemnity or whatever else you need, we’ll run you a quick quote online, and let you decide if we’re a good fit.
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