Comparing UK Business Savings Accounts: Your Comprehensive Guide

Business Banking Business Savings Finance Finance Options Money Management

Introduction to UK Business Savings Accounts

As a business owner, managing your finances efficiently is crucial for long-term success. One key aspect of financial management is finding the right savings account for your business.

In the United Kingdom, there are various options available to businesses when it comes to savings accounts. In this comprehensive guide, we will explore and compare UK business savings accounts to help you make an informed decision that best suits your business needs.

Business Savings Guide

Understanding Business Savings Accounts

Business savings accounts are specifically designed for businesses to earn interest on their surplus funds while keeping them separate from their operational accounts. These accounts offer a safe and secure way to save money, allowing businesses to earn interest and potentially grow their capital.

Every business, big or small should consider holding some level of savings. Whether this is to plan for unexpected expenses, save for tax payments, or build a war chest for new projects.

Comparing Different Types of Business Savings Accounts

  • Instant Access Business Savings Accounts:
    • These accounts provide unrestricted access to your funds without any notice period or penalties.
    • Ideal for businesses that require immediate access to their funds for liquidity purposes.
    • Interest rates for instant access accounts tend to be lower compared to other types of accounts.
  • Notice Business Savings Accounts:
    • These accounts require you to provide a specified notice period, typically ranging from 30 to 120 days, to withdraw funds without incurring penalties.
    • Interest rates for notice accounts are generally higher than instant access accounts.
    • Suitable for businesses with surplus funds that can plan their cash flow ahead of time.
  • Fixed-Term Business Savings Accounts:
    • These accounts lock your funds for a predetermined period, typically ranging from 6 months to 5 years.
    • Fixed-term accounts offer higher interest rates compared to instant access or notice accounts.
    • Recommended for businesses with surplus funds that can afford to have their money tied up for a specific period.

Comparing Providers

Now, let’s compare some prominent providers of business savings accounts in the UK:

  • High Street Banks:
    • Established banks such as Barclays, Lloyds, and HSBC offer business savings accounts.
    • They provide a wide range of account options to cater to different business needs.
    • However, interest rates offered by high street banks may not be as competitive as those offered by alternative providers.
  • Challenger Banks:
    • Challenger banks like Starling, Tide, and Metro Bank have gained popularity in recent years.
    • They often offer higher interest rates and more innovative features compared to traditional banks.
    • Some challenger banks also provide additional benefits, such as expense management tools or integration with accounting software.
  • Building Societies:
    • Building societies, like Nationwide and Yorkshire Building Society, can be a viable option for business savings accounts.
    • They often offer competitive interest rates and a more personal approach to customer service.
    • Building societies are known for their community focus and may align well with businesses seeking ethical banking options.
  • Specialist Business Savings Providers:
    • There are specialist providers that solely focus on business savings accounts, such as Aldermore and Shawbrook Bank.
    • These providers may offer niche products and highly competitive interest rates.
    • Consider these options if you are looking for tailored solutions and better returns on your savings.

Factors to Consider

When comparing business savings accounts, it’s important to take the following factors into account:

  • Interest Rates:
    • The interest rate determines the return on your savings.
    • Compare rates offered by different providers and consider whether they are fixed or variable.
  • Account Fees:
    • Some accounts may have monthly or annual fees.
    • Assess the impact of fees on your overall earnings and choose an account with minimal charges.
  • Account Access:
    • Determine how important immediate access to funds is for your business.
    • Balance the need for accessibility with higher interest rates or notice periods.
  • Financial Stability:
    • Evaluate the financial stability and reputation of the provider.
    • Look for providers that are covered by the Financial Services Compensation Scheme (FSCS) to ensure your deposits are protected.

Tax Implications of Business Savings

As we have mentioned, you will earn interest as part of your savings account. This interest unfortunately comes with tax implications.

These tax implications depend on whether you are a ‘Person’ or ‘Corporation’ in the eyes of the Government. In the UK, you are either considered a Sole Trader/Partnership, or a Limited Company/LLP.

Limited CompanySole Trader
All interest earned from your savings are counted towards your profit where they will be assessed at your relevant corporation tax rate. Your respective rate can be calculated here.Savings interest are taxed at your respective tax rate depending on your overall earnings. Basic rate taxpayers get £1,000 tax free interest, and higher rate taxpayers get £500 tax free interest.


Choosing the right business savings account is crucial for businesses to maximise their earnings and effectively manage their surplus funds. By considering factors such as interest rates, account fees, access options, and the stability of the provider, you can make an informed decision that aligns with your business goals. Whether you opt for a high street bank, a challenger bank, a building society, or a specialist provider, taking the time to compare different options will enable you to find the best business savings account for your specific needs. Remember, regularly reviewing your savings account and adapting it as your business grows can help you optimise your savings strategy for the long term.

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