Limited Company Bank Account UK: Legal Requirements, Options and Fees

What is a limited company bank account

A limited company bank account is a business current account held in the name of the limited company, not in the name of its directors or shareholders. A UK limited company is a separate legal entity from the individuals who own and run it. This legal separation means the company can own assets, enter into contracts, and incur liabilities in its own right. A dedicated bank account is the financial infrastructure through which this separation operates in practice.

The account holds company funds - paid-in share capital, retained trading income, VAT collected, PAYE deductions held pending payment to HMRC - separately from the personal finances of directors and shareholders. Directors drawing salary or dividends from the company do so through transfers from the company account to their personal accounts, not by treating the company account as their own.

There are approximately 5.1 million private limited companies registered at Companies House as at 09 Jun 2026, according to Companies House statistical data. Every new limited company requires a bank account before it can begin trading, receive investment, or pay its directors and staff.

Is a limited company legally required to have a bank account

Yes, in practical terms. While no single piece of UK legislation explicitly states that a limited company must hold a bank account, the legal obligations placed on limited companies make operating without one effectively impossible.

Companies Act 2006 requires directors to maintain adequate accounting records. HMRC requires companies to file corporation tax returns and pay corporation tax, which requires a means of making payments to HMRC. VAT-registered companies must make quarterly VAT payments electronically. PAYE employers must make monthly Real Time Information submissions and payments to HMRC. None of these obligations can realistically be met without a business bank account in the company's name.

Additionally, directors have a legal duty under Companies Act 2006 section 172 to act in the interests of the company. Using personal accounts for company transactions comingles company and personal assets, potentially breaching this duty and exposing directors to personal liability for company debts.

Best limited company bank accounts: options compared

The table below compares the main limited company bank account options as at 09 Jun 2026, sourced from the CMA Open Data API and provider published rates.

Source: CMA Open Data API and provider published rates, 09 Jun 2026. Subject to change. FSCS protection applies to FCA-authorised banks only.

How to open a limited company bank account

A limited company bank account can be opened before or immediately after the company is incorporated at Companies House. Most providers require the company to be registered before the account can be opened. Companies House registration takes 24 hours online and costs £50 as at 09 Jun 2026.

Documents required vary by provider but typically include:

• Companies House registration number: The unique 8-digit number issued on incorporation
• Certificate of incorporation: Issued by Companies House on registration
• Photo ID for all directors: Valid passport or UK driving licence for each director
• Proof of address for all directors: Bank statement, utility bill, or HMRC correspondence dated within 3 months
• Registered office address: The company's registered address as filed at Companies House
• Business description: The nature of the company's trading activity and estimated annual turnover
• Beneficial ownership information: Details of any persons with significant control (PSC) holding 25% or more of shares

Digital-first banks complete the process in-app and can open accounts within minutes of approval. CMA9 high-street banks typically take 3 to 7 business days from application to account activation.

Limited company bank account for a new company

New limited companies can open a bank account immediately after Companies House registration, which takes 24 hours online. Most banks accept applications from companies with no trading history. NatWest explicitly accepts startups. Starling, Monzo, and Tide have no minimum trading history requirement.

Some CMA9 banks conduct more thorough due diligence on new companies with no financial history, which can extend the application process. For companies needing an account urgently to receive investment or begin trading, digital-first banks typically offer faster onboarding.

Companies incorporated at Companies House but not yet trading should note that some banks close dormant accounts after extended periods of inactivity. A company that incorporates but delays trading for more than 6 to 12 months should check the inactivity policy with the chosen provider.

Limited company bank account: director access and permissions

Limited company bank accounts support multiple directors as account signatories. The level of access available to each director varies by provider. Most CMA9 banks and digital challengers support:

• Single director access with sole signing authority
• Multi-director access with individual signing authority (any director can authorise payments)
• Dual authorisation (two directors must approve payments above a defined threshold)

Starling Business supports multi-director access with individual card and payment permissions per user. Nationwide's FlexBusiness account supports up to two directors. Companies with more than two directors should verify signatory arrangements directly with the chosen provider before applying.

Corporation tax, VAT, and PAYE: using the limited company account

The limited company bank account is the primary account through which HMRC tax obligations are met. Corporation tax payments are made to HMRC's corporation tax account using the company's unique taxpayer reference. VAT payments are made quarterly or monthly under the standard VAT accounting scheme, or annually under the annual accounting scheme. PAYE tax and National Insurance are paid to HMRC monthly based on Real Time Information payroll submissions.

Maintaining a running cash reserve for upcoming tax obligations within the business account reduces the risk of cash flow problems at payment dates. HMRC charges interest on late corporation tax payments at the Bank of England base rate plus 2.5 percentage points. Late VAT payments attract a points-based penalty system under rules effective from January 2023. Accurate cash flow forecasting using accounting software connected to the business account supports timely tax payments.

Accounting software integration for limited companies

Open banking connections enable limited company accounts to connect directly to accounting software platforms. Most CMA9 banks and digital challengers support connections to Xero, QuickBooks, Sage, and FreeAgent. These connections pull transaction data automatically into the accounting software, enabling real-time profit and loss reporting, VAT return preparation, and payroll management.

Making Tax Digital for VAT requires VAT-registered companies with taxable turnover above £90,000 to use compatible software for VAT record-keeping and return filing. MTD for Corporation Tax is scheduled to be phased in from 2026. An open banking-connected accounting platform is the most straightforward route to compliance with both requirements.

FSCS protection for limited company deposits

Limited companies are separate legal entities and hold their own FSCS protection entitlement of £85,000 per banking licence, separate from any personal deposits held by the directors. A director holding personal savings at the same bank as the company account has two separate FSCS entitlements - one for personal deposits and one for company deposits - up to £85,000 each.

Companies holding cash reserves significantly above £85,000 should consider distributing deposits across multiple banking licences to maintain full FSCS coverage. For example, a company holding £150,000 in a single account at one bank has £65,000 above the FSCS limit unprotected. Distributing between two banks with different banking licences provides £85,000 of cover at each institution.

Frequently asked questions about limited company bank accounts

Does a limited company legally need its own bank account?

In practical terms, yes. A limited company is a separate legal entity and its finances must be kept separate from its directors' personal finances. Companies Act 2006 requires directors to maintain adequate accounting records. HMRC requires electronic payment of corporation tax, VAT, and PAYE. These obligations cannot be met without a company bank account. Directors using personal accounts for company transactions risk breaching their statutory duties.

What is the cheapest limited company bank account in the UK?

The cheapest limited company bank accounts with no monthly fee and no electronic payment charges are Starling Business, Nationwide FlexBusiness (CMA9, up to 2 directors), and Mettle (NatWest). All three are permanently free and operated by FCA-authorised banks with FSCS protection. Fee data sourced from CMA Open Data API and provider published rates as at 09 Jun 2026.

Can a director use a personal account for a limited company?

Using personal accounts for company transactions is not recommended and potentially unlawful. A limited company is a separate legal entity. Commingling company and personal funds may breach the director's duties under Companies Act 2006 and could expose the director to personal liability for company debts by undermining the legal separation between director and company.

How long does it take to open a limited company bank account?

Digital-first banks can open limited company accounts within minutes to hours of completing in-app verification. CMA9 high-street banks typically take 3 to 7 business days. The application itself takes 10 to 30 minutes. Companies House registration, required before most banks will open an account, takes 24 hours online at a cost of £50.

Can I open a limited company bank account before trading?

Yes. Most banks accept applications from newly incorporated companies with no trading history. The account can be opened immediately after Companies House registration to receive share capital, investment, or initial customer payments.

What happens to the limited company bank account if the company is dissolved?

When a limited company is dissolved at Companies House, the company ceases to exist as a legal entity. Any funds remaining in the company bank account at the point of dissolution become bona vacantia - ownerless property that passes to the Crown. Directors should ensure all company funds are distributed or settled before initiating dissolution. Bank accounts should be formally closed as part of the dissolution process.

Is a limited company bank account FSCS protected?

Yes, if opened with an FCA-authorised bank. Limited companies have their own FSCS entitlement of £85,000 per banking licence, separate from any personal deposits held by the directors at the same bank. E-money accounts from providers such as Tide and Revolut are not FSCS protected.

Limited company bank account and Making Tax Digital

Making Tax Digital for VAT requires VAT-registered companies with taxable turnover above £90,000 to maintain digital VAT records and file returns using compatible software. Open banking connections between the company bank account and MTD-compatible accounting software are the standard way to meet this requirement. Transaction data flows automatically from the account into the software, which generates VAT returns directly from the digital records.

Making Tax Digital for Corporation Tax is scheduled for phased introduction from 2026. The government has confirmed the policy direction but implementation timelines remain subject to HMRC confirmation. Limited companies should treat MTD for Corporation Tax as a medium-term compliance requirement and ensure their accounting software and banking infrastructure is positioned to support it.

Setting up a limited company: bank account as part of the process

Opening a limited company bank account is one of the first practical steps after Companies House registration. The typical sequence for a new limited company is: register at Companies House (online, £50, 24 hours); obtain the certificate of incorporation and company registration number; apply for a business bank account using the registration number and certificate; once the account is open, set up HMRC for corporation tax, PAYE if employing staff, and VAT if turnover will exceed £90,000.

Share capital paid in by shareholders should go directly into the company bank account. Mixing share capital with personal funds in a personal account, even temporarily, complicates the company's financial records and may cause problems if the company is later inspected by HMRC or audited.

Companies House requires limited companies to file a confirmation statement annually (£34 online) and annual accounts within 9 months of the financial year end for private companies. The company bank account provides the financial records from which these accounts are prepared.

Choosing between free and paid limited company bank accounts

The decision between a permanently free account and a paid CMA9 account depends on the company's specific requirements. Permanently free accounts - Starling, Nationwide, Mettle - have no monthly fee and no electronic payment charges, making the total monthly banking cost zero for companies with standard transaction volumes. These accounts are operated by FCA-authorised banks with full FSCS protection and open banking connectivity to major accounting platforms.

Paid CMA9 accounts - from £7.00 per month at Lloyds to £8.50 at Barclays after the free period - provide branch access, relationship manager availability for larger facilities, and the full breadth of CMA9 lending products including overdrafts, invoice finance, asset finance, and commercial mortgages. For companies that need cash deposit facilities, a branch relationship for large payment authorisations, or access to structured lending, the monthly fee represents the cost of those services.

A common approach for new limited companies is to open a permanently free digital account at incorporation and transition to a CMA9 bank account when the company grows to a size where relationship banking, cash handling, or more complex lending becomes a practical requirement. CMA9 free banking periods of 12 to 18 months provide a cost-free transition period if starting with a high-street bank from the outset. Allica Bank is a notable alternative in the paid-but-interest-bearing tier: it charges no monthly fee but pays up to 4.33% AER on current account balances, making it particularly relevant for companies that maintain significant cash reserves between tax payment dates.