Sole trader bank accounts: fees, protection and free MTD software compared.
Several business accounts now come with free software for Making Tax Digital, so the account you choose can affect what you pay for your tax software. This page sets out the published facts for seven accounts that sole traders can open, so you can compare them on the points that matter to you. MTD Magpie does not name a best account.
Last checked 24th September 2026.
Do you need a business bank account?
No. The government's business.gov.uk says: Sole traders and normal partnership are not legally required to have business bank accounts, but separating personal and business finances makes accounting simpler.
Making Tax Digital does not require one either. If you plan to use a personal account for your business, check that your bank's terms allow it.
Who holds your money
This is the first thing to check, because it decides how your money is protected. If the account is held with a bank, eligible money is protected by the Financial Services Compensation Scheme (FSCS) up to £120,000 per eligible person, per authorised firm. The limit applies to the bank, not the brand, so money you hold with the same bank under different names shares one limit.
Some accounts are e-money accounts instead. An e-money firm must safeguard your money, which means keeping it apart from its own, but the FSCS does not cover it. Several app-based providers have moved customers from e-money to bank accounts in recent years, so older accounts with the same brand may be different; your account terms say which you have.
Money and fees
| Account | Who holds the money | Protection | Monthly fee | UK transfers | Cash deposits | Cash withdrawals |
|---|---|---|---|---|---|---|
| Tide (Free plan) | ClearBank Ltd. Tide Platform Limited runs the app and is not a bank. Some older Tide accounts are e-money accounts with PrePay Technologies. | FSCS up to £120,000 for ClearBank accounts | £0 | 5 free a month (in or out), then 20p each | Post Office £2.50 up to £500, or 0.99% above £500; PayPoint 3% | £1 |
| Starling (sole trader account) | Starling Bank Limited | FSCS up to £120,000 | £0 | No charge | £3 or 0.7%, whichever is higher; up to £5,000 a day and £20,000 a year | No charge from Starling in the UK |
| Monzo Business Lite | Monzo Bank Limited | FSCS up to £120,000 | £0 | No charge | £1 at a Post Office or PayPoint; up to £3,000 a month | No charge in pounds in the UK |
| Mettle | National Westminster Bank plc, trading as Mettle. Some older Mettle accounts are e-money accounts with PrePay Technologies. | FSCS up to £120,000 for the bank account, shared with any other money you hold with NatWest | £0 | No charge listed | £2.75 a Post Office deposit | £1 |
| ANNA (Pay as you go) | PayrNet Limited, an e-money institution | Safeguarded e-money, not FSCS | £0 | Sending free; the first £1,000 received each month free, then 0.95% | Cash can be paid in at PayPoint; fee not stated on the pricing page | No charge |
| Zempler Business Go | Zempler Bank Limited | FSCS up to £120,000 | £0 | 3 free a month, then 35p | Post Office £4 minimum, or 0.55% | £2 in the UK |
| Countingup | Griffin Bank Ltd. Some older Countingup accounts are e-money accounts with PrePay Technologies. | FSCS up to £120,000 for Griffin accounts | From £5 a month, depending on how much you pay in, after a 3-month free trial | 3 free a month (in or out), then 27p | Not stated on the pricing page | £1 |
Figures are for the free or cheapest plan open to sole traders, from each provider's own pages, checked 24th September 2026. Fees change, so check the provider's page before you apply.
Tax, software and savings
| Account | Free MTD for Income Tax | Final declaration | VAT filing included? | Links to other software | Interest | Key eligibility |
|---|---|---|---|---|---|---|
| Tide (Free plan) | Yes, free | Yes | No: VAT needs Tide Accounting, included in the Pro plan at £27.49 a month | Third-party accounting links included; Tide's Xero Connector is not included on the Free plan | Instant Saver and Tax Saver 1.5% AER on the Free plan | 18 or over, UK mobile number, UK home address, registered with HMRC |
| Starling (sole trader account) | Yes, free (Accounting Essentials) | Unclear: its MTD page says "End-of-year declarations coming soon", but its Help Centre says Accounting Essentials can submit your end of year declaration. Check with Starling | No: Accounting Plus costs £7 a month until April 2027, then £14 | Xero, QuickBooks and FreeAgent, free | None on the account, according to Starling's fee schedule | UK resident, 18 or over; up to two sole trader accounts |
| Monzo Business Lite | Yes, free | Yes | No: Monzo says its MTD tool does not file VAT | Only on the Pro and Team plans | Savings Pots 1.30% AER (variable) | Based in the UK, at least 16; up to three businesses |
| Mettle | Through FreeAgent, free if you make at least one Mettle transaction a month | Through FreeAgent | Yes, through FreeAgent | FreeAgent included; can also sync with Xero and QuickBooks | Savings pot 0.95% AER (variable); only savings pots earn interest | 18 or over, UK tax resident only; main balance up to £1 million |
| ANNA (Pay as you go) | Yes, free for the 2026 to 2027 tax year; later years' price not stated | Yes | No: £4.50 plus VAT per VAT return | Xero | Savings at a promotional rate for the first 3 months, then a rate that depends on the plan | Sole traders registered in the UK with a UTR number; some business types excluded |
| Zempler Business Go | No | Not applicable | Yes, free | Xero, QuickBooks and Sage | Not stated on the Business Go page | Most businesses; some industries excluded |
| Countingup | No | Not applicable | Yes, included | None stated | Not stated on the pricing page | At least 18, UK resident |
"Free MTD for Income Tax" means the provider says its own tool can send your quarterly updates to HMRC at no extra cost. "Final declaration" is the year-end step that replaces the old tax return.
Differences that may matter
If you pay in cash. Cash deposit fees vary more than any other charge. Some charge a flat fee for each deposit, others a percentage with a minimum, and most set daily, monthly or yearly limits. If you bank cash every week, work out a typical month before you choose.
If you want the account to handle Making Tax Digital. Tide, Monzo Business Lite and ANNA say their free tools send both the quarterly updates and the final declaration. Starling's free tool sends quarterly updates. Starling's own current pages conflict: its MTD page says end-of-year declarations are coming soon, while its Help Centre says Accounting Essentials can submit them. Check with Starling before relying on this feature. Mettle includes FreeAgent, a full accounting product, free while you make at least one Mettle transaction a month. Zempler and Countingup file VAT returns but do not offer Making Tax Digital for Income Tax, so you would need separate software.
If you are VAT registered. VAT filing is included with Mettle (through FreeAgent), Zempler and Countingup. Tide, Starling and ANNA charge for it, and Monzo says its MTD tool does not file VAT.
If you use Xero, QuickBooks or FreeAgent. Starling says it connects to Xero, QuickBooks and FreeAgent free, and Zempler lists Xero, QuickBooks and Sage. Monzo connects only on its paid plans. Tide includes third-party accounting links on its Free plan, but not its Xero Connector.
If protection matters most to you. ANNA's account is e-money and not covered by the FSCS. The others are bank accounts for new customers, according to their own pages.
If you set money aside for tax. Only some accounts pay interest on a tax pot or savings pot, and the rates differ by plan and change often.
If you already have an account
You may not need to move. Our account routes page shows which accounts include MTD software, and the finder asks whether you would open a new account before it suggests one that needs it.
Questions sole traders ask
Do sole traders need a business bank account?
No. The government's business.gov.uk says sole traders "are not legally required to have business bank accounts", although keeping business and personal money apart makes the accounts simpler. Making Tax Digital does not require one either. Check your personal bank's terms if you plan to use a personal account for business.
Is money in an e-money account protected?
Not by the FSCS. An e-money firm must safeguard your money, which means keeping it separate from its own money, but the FSCS does not cover it. Money in a bank account is covered by the FSCS up to £120,000 per eligible person, per authorised firm.
Which sole trader accounts include free MTD for Income Tax software?
In our checked data, Tide, Monzo Business Lite and ANNA say their free tools send the quarterly updates and the final declaration. Starling's free tool sends quarterly updates. Starling's own current pages conflict: its MTD page says end-of-year declarations are coming soon, while its Help Centre says Accounting Essentials can submit them. Check with Starling before relying on this feature. Mettle includes FreeAgent free if you make at least one Mettle transaction a month. Zempler and Countingup offer VAT filing only.
Can I keep my current bank and still get free MTD software?
Yes. You do not need a particular bank for Making Tax Digital, and several free products work with any bank. Our free MTD software page compares them.
Sources
- business.gov.uk, Getting a business bank account, checked 24th September 2026.
- FSCS, Check your money is protected, checked 24th September 2026.
- Each provider's own pricing, fees, eligibility and Making Tax Digital pages, checked 24th September 2026.