Is inflation eroding the value of your business bank balance? With inflation still around 3.5% in September 2026, many business owners were moving spare funds into interest-bearing savings accounts.
Successive rises push the official base rate over 5% – but cuts have followed
We have all been used to over a decade of very low interest rates. The BOE base rate stayed near zero from 2009 to 2021.
Since reaching a low of 0.10% in March 2020, the Bank steadily increased the base rate from December 2021, peaking at over 5% before cutting rates in 2025 to 3.75% at the time of writing.
Most economists expect the rate to plateau or see modest further reductions over the coming year or so.
Despite changes in the bank rate, it’s no surprise that the major banks haven’t always aligned their interest rates fully with the official rate. In fact, many of us are still earning little or nothing at all on our business bank account balances.
With this in mind, we decided to scan various ‘best buy’ comparison sites to find out how much business owners could be earning on their spare funds — both profits, plus any funds required to pay future tax bills.
There are various types of business bank accounts
In this guide, we look at the features of each account type and list some of the most competitive offerings currently available.
We aren’t sponsored by any of the financial institutions we’ve mentioned in this article.
Broadly speaking, business accounts fall into one of four categories:
- Current accounts
- Instant access savings accounts
- Notice accounts
- Fixed-term accounts
Current accounts
We’re all familiar with this type of account. Variable interest rates apply if you’re lucky enough to receive any interest at all.
Shockingly, none of the major players pays any interest at all on current account deposits. The only exception appears to be ‘premium’ type current accounts, which are available only to professional firms such as accountants or solicitors.
Given that interest rates are not a factor when comparing current account providers, there are plenty of other factors to consider, including sign-up bonuses, cashback offers, customer service, ease of use and integrations with software such as Xero.
For more details, read our limited company bank account guide or our sole trader bank account guide.
Instant access accounts
You can withdraw funds at any time, as the name suggests. Interest rates are variable. This type of account will appeal to many business owners who want to earn a reasonable interest rate while being able to withdraw funds instantly to pay tax bills, for example.
- Tide Business Savings – 4.00% (you need to open a free Tide current account first)
- Kent Reliance – 4.00%
- Virgin Money Business Access Savings – 3.50%
- Other competitive options around 3.6–3.95% (e.g., Tipton & Coseley, Hampshire Trust)
Notice accounts
Notice accounts require a pre-agreed notice period of 7 days or more before you can withdraw funds. Interest rates are variable. If you have business funds which you won’t need for drawings, dividends or tax bills in the near future, this type of account is a good bet.
- Redwood Bank – 95 day notice – 4.10%
- United Trust Bank – 180 day notice – around 3.70%
- Cambridge & Counties Bank – 95 day notice – around 3.65–3.70%
- Recognise Bank – 180 day notice – around 3.55–3.70%
Term deposit accounts
This type of deposit account offers a fixed interest rate for a predefined term — typically 1 to 5 years. Penalties apply for early withdrawal.
- Hampshire Trust Bank – 1 year bond – 4.21%
- Cambridge & Counties Bank – 1 year bond – 4.20%
- Oxbury Bank – shorter terms (e.g., 6 months) – around 4.26%
- UBL UK – longer terms (e.g., 3–5 years) – around 4.21–4.26%
Things to consider when choosing any type of business savings account
As you can see, many players are competing in the savings account market, including several unfamiliar names. Although the headline interest rate matters, there are several other things to consider before opening a new savings account.
Is the account covered by the FSCS?
The government-backed Financial Services Compensation Scheme will protect your savings if your bank fails — as long as the financial institution is eligible.
According to the FSCS:
If a UK-authorised bank, building society or credit union fails, we’ll automatically compensate each eligible company depositor up to £120,000.
A limited company is normally treated as a separate depositor from its owners, while a sole trader is not separate from the individual. Check whether accounts with different banking brands share the same authorisation.
Is my business eligible to apply?
You will usually need a current account from which to send and receive funds. Providers may have different rules for UK-based sole traders, partnerships and limited companies, and the applicant must generally be over 18.
Most business savings accounts are open to both sole traders and limited companies; however, restrictions may apply to certain types of organisations, such as charities.
How do you open the account?
You can open most accounts online — the application process can take as little as 10 minutes. Companies may need to provide their registration number, address and details of the people who control them.
Sole traders and partners usually need to provide business information, as well as personal details such as date of birth, address, and contact details.
Your bank will need to run credit checks and may ask for supporting documentation before you can use the account.
How can you manage the account?
Although many savings accounts are online-only (with telephone support), you have several options if you need branch access (e.g., Metro) or prefer to manage your account by post.
How often is interest paid?
Interest is typically paid either monthly or annually.
Is there a minimum deposit required?
Most instant-access savings accounts require only a nominal minimum deposit — typically £1. Longer-term accounts will usually have minimum deposit requirements, particularly for term deposit accounts.
How is interest on your business accounts taxed?
For a limited company, savings interest generally contributes to its taxable profits and is subject to Corporation Tax.
For sole traders and individual partners, interest on business savings is normally treated as savings income for Income Tax purposes, rather than as trading profit.
The tax treatment depends on the business structure and who owns the account.
How many business savings accounts can you have?
You can open more than one. If you’re concerned about breaching the FSCS £120,000 limit, you might decide to spread your funds across separately authorised providers. It’s up to you.