Having your money sitting in an account not earning interest is never great whether it’s personally or as a business, that’s where finding the best business savings accounts that fit your businesses needed is key.

This guide helps you find the best UK business saving account as well as the different types of account so you can start making your businesses cash work for you rather than simply sitting there.

Note: We aim to keep all of these rates and information on this page as up to date as possible, but please check the bank/companies website for the latest information.

The Best Business Savings Accounts

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One of the leading rates available is the Tide Business savings account, this is currently only available for new customers who sign up but should be soon available to all Tide business customers.

The Tide instant saver account currently offers the following:

• Variable interest rate of 4.33% AER
• Available to UK businesses
• Calculated daily and paid monthly
• Earn interest on balances of £1 or more
• Instant access to the money when you need it
• Your eligible deposits of up to £85,000 are protected by the FSCS
• Open and set up via the app
• You can get £50 free deposited into your Tide business account when you join using code FOUNDERPASS

Why use a business savings account?

Think of these accounts much like you would a personal savings account but for your business. They’re accounts designed to give you interest on the money you keep in it. 

Rather than having your money sitting in a current business account where it doesn’t earn interest (or if it does it’s often at a very low interest rate), these accounts have higher interest rates meaning your money can grow.

These can be favourable to any business but even more so for those that have higher cash balances, even more so if that cash balance doesn’t reduce or change much. 

What’s the difference between a business savings account and business current account?

In simple terms, business saving accounts are for holding money and earning interest whereas business current accounts are used for your business transactions.

Business current accounts are designed for every day transactions, from paying suppliers, costs, wages, marketing to receiving payments from customers, clients and so on. Business saving accounts on the other hand are designed more for money that would otherwise just be sitting in your account to earn interest. 

Depending on the type of savings account for businesses that you opt for, these can be good for short term or long term.

Who are business savings accounts for?

As the name suggests, these accounts are designed for businesses, therefore in general you’ll need to fit the below requirements in order to open one. These requirements are much the same as those for business current accounts.

• Be either a sole trader, limited company or partnership
• Be a UK resident (as this guide is focused on UK business accounts)
• Be 18 years old or older

Note: These are general requirements, each company that offer savings accounts will have their own specific requirements so please check these when applying.

What are the best business savings account rates?

As you’d expect the best interest rates available often change, much like interest rates in general. Expect to see rates from 0.1% all the way past 5%, the specific rate you will get will depend on the type of account you go for as well as larger economic factors that affect the rates.

You will (in general) find the best interest rates will be for the fixed business savings accounts where your money may be locked in for a specific amount of time, where as those that give you instant access at any time to your money will have lower rates. 

The different business saving account types

There are three main business saving account types, each slightly different in the way they work, we explain them below.

Easy Access accounts

As the name suggests these are accounts where you can easily access your money at any time, these generally offer a variable interest rate rather than a fixed one. 

The benefits of these types of account are:

• Access your money whenever you need it - A good option for businesses that may need to use the money in these accounts at a moments notice
• Earn interest - Although lower interest rates than most fixed accounts, you’ll still be earning more interest in general than a normal business current account
• Often require no or low deposits to open

The downsides to these accounts are:

• Lower interest rates than fixed accounts
• Rates will fluctuate - as rates are typically variable, your interest rate and returns will change

Fixed rate accounts

These types of account lock in your money for a certain period of time, during these time you won’t be able to access your money.  These periods can vary from 24 hours to multiple years.

The benefits of fixed accounts are:

• Higher interest rates in general
• Fixed rates - so you know what your returns will be

The downsides to fixed accounts are:

• Your money is locked in - consider if your business needs the cash quickly then you may want to have a easy access account
• A minimum deposit is normally required

Notice account

These types of business savings account offer you variable interest rates but require you to request your money and give a notice period. For example, the notice period of an account may be 30 days, so if you require the money you need to give the bank 30 days notice when you want to withdraw some or all of the money. 

In general the notice periods for accounts like these are 30, 60, 90, or 120 day periods.

The benefits of Notice accounts for businesses are:

• Higher interest rates in general

The downsides are:

• You’ll need to give notice before accessing your money

Choosing the best business savings account

The best business savings account will be different for each business, it will depend on your companies financial position, how it uses cash, how often you need access to it, how much interest you’re wanting, how often you will deposit cash and a number of other factors. 

You can use the below steps to work out which account may be the most suitable for you:

1. Work out which type of account is most suitable for you, whether it’s an Easy Access, Fixed or Notice account (see the paragraph above)
2. Once you have this, look into what options are available from banks/companies offering these types of account. Consider the interest rate and the ease and speed of opening (depending on how important this is for you). 

Additionally you’ll want to consider the below factors:

• Deposit minimums - Some savings accounts will require deposit minimums.
• Minimum balances - Much like the above, some will require you have a minimum balance at all time in your account, often this is anything from £1 up to £1,000.
• Ease of access - Check to see how fast you can get your money out if you need it urgently.
• Ease of opening - Newer banks and companies such as Tide offer you the ability to open accounts in minutes compared to some more traditional (highstreet) banks which can take days or even weeks to open.
• Fees - Some accounts will have fees associated with them, make sure to fully understand these fees before signing up and opening a new account.
• Bonuses - Some accounts will have bonuses, this may be initial higher interest rates or a certain kick back, make sure to understand the rates after these bonuses have been used up and how easy it is to upgrade your account or switch accounts.
• Ways to access - Most banks now have digital access whether this is via a website or app, but if you prefer physical banking then you’ll need to make sure the company you use has physical locations near you.

Access flexibility vs higher interest 

There will always be a weigh up that you need to consider between a higher interest rate and the flexibility to access your money. Only you as a business owner or decision maker will know what is right for your business.

Some businesses will always want the ability to access cash in savings account instantly where as others may have enough cash reserves or have a business that can happily lock that money into long term saving accounts.

Protection of your business savings

It’s often recommended that you opt for business saving account that protects your deposits via the Financial Services Compensation Scheme (FSCS), this is a UK specific protection scheme that in the worse case and the company you bank gets into financial difficulties then your savings up to £85,000 is protected (Note: This can be up to £170,000 if you are a partnership). 

This £85,000 protection amount is per bank or building society, so if you have more than this it can be a wise move to spread this savings across multiple business saving accounts making sure each does not have more than the £85,000 amount.

Do I pay tax on my business savings?

As always it’s best to get independent advise from a tax specialist as the amount and taxes that will be due will vary depending on a number of factors. However in general, the amount you will get in interest in most cases is given in ‘Gross Interest’ form, meaning you have no paid tax on it. 

This means that you will need to declare your interest and will be taxed accordingly, but please do speak to your accountant for full clarification, we do not give any financial or tax advice.

FAQs

Hopefully we’ve helped answer most of your questions above, however we’ve compiled some of the most frequently asked questions below in relation to business savings in the UK.

Are business savings rates better than personal savings?

The answer does vary on this from time to time, but as a general guide you’ll find personal savings rates are better than business. This doesn’t mean you should pull your spare business cash out of your company to then put into your personal savings, as there are tax implications on doing so. 

Speak to your tax advisor or accountant who will be in a better position to advise based on your financial tax position.

Which accounts are protected by the FSCS?

You will need to check each bank or building society to see if they are FSCS protected, they will generally say on their website if they are, however as an additional check you can use the FSCS checker to see if they are and how much you are protected for.

What does AER mean?

You’ll commonly see the acronym AER around this topic, this means Annual Equivalent Rate, it is displayed typically as a percentage and helps you get an understanding of amount of interest you may earn over the year.

Can I open more than one business savings account?

Yes, you can open as many as you like. Many businesses will opt to open multiple especially if they have over £85,000 in the account in order to spread this money and have the FSCS protection across banks.

Should I open a business savings account?

This question is one that is ultimately up to you to decide, you can get advice from a tax specialist and/or accountant. Many business owners will opt to open accounts if there cash is just sitting in their account and they know they don’t need immediate access to it. 

How else can my business save money?

As well as using a savings account for your business, think about other costs that you regularly get, these can be from phone rental to utilities, look into each and see if there's an opportunity to find a better price. For example you can use an Octopus referral code to switch your electricity and gas to Octopus energy and get £100 cashback and the tariffs can be substantially better than a lot of existing business ones.

Consider also looking for sign up offers to get perks on business banking and payments, for example you can get £75 free credit by using a Capital On Tap promo code as a new customer as well as 1% cashback.