The benefits of opening a business bank account in the UK
If you sell goods or services in the UK, opening a British business bank account could make life easier and save you money.
As well as potentially being more tax efficient, you and your business could benefit from competitive introductory rates exclusive to new customers. And many British banks offer free or low-cost electronic transfers.
But above all else, if you regularly deal with British customers and suppliers, having a UK bank account will make selling and invoicing easier.
However, if you’re not a UK resident, opening a business account in the UK is complex. You’ll find your choice is limited and many banks have high minimum deposits meaning you need a substantial amount of capital at your disposal.
Why most UK banks require high minimum deposits from non-residents
The trouble is, a lot of UK banks require non-residents to make hefty initial deposits. This is down to stringent British Anti-Money Laundering regulations which require banks to verify foreign applicants’ identities. It’s time-consuming for banks to run background, credit checks and more on directors living outside the UK.
To offset the extra admin involved in approving non-residents, the majority of British banks require large minimum deposits. Often, this is around £25,000. Plus, many banks also require you to maintain an average monthly balance of the same amount.
Added to this, unfortunately, Brexit has impacted the variety of zero deposit accounts available as uncertainty forced some European neobanks (such as N26) to withdraw from the UK.
However, there are still a number of banks which don’t require deposits which are open to you as a non-resident. Let us talk you through your options.
Banks with high minimum deposits
Lloyds and Barclays are known for being particularly accommodating of non-residents. However, both Lloyd and Barclays require deposits of £25,000 within the first month. They also expect you to maintain an average monthly balance of this amount.
Banks with no minimum deposit
Revolut - no minimum deposit
Revolut is a challenger bank built around a mobile app. Business accounts are currently available to businesses physically registered in European Economic Area countries and Switzerland.
Revolut has no minimum deposit requirement. Another benefit of Revolut is that they offer multi-currency accounts which allow you to open and manage accounts in 28 currencies. They also let you spend in over 150 countries at market exchange rates.
HSBC - no minimum deposit
If you’d rather opt for a traditional bank, HSBC is a fantastic choice. One of the UK’s ‘Big Four’ and renowned for being internationally-focused, HSBC is known for offering fantastic customer service - to both businesses in the UK and abroad.
HSBC does not require any minimum deposit. What’s more, with HSBC you can open a business account online or in person, and, as a new customer, account management fees are waived for the first 12 months.
Royal Bank of Scotland - no minimum deposit
RBS have branches across the UK but also offer digital banking. You don’t need to deposit anything to set up an account and your account will remain open as long as your account remains in credit.
The perks of opening a business account with RBS include access to free online accounting software and dedicated Relationship Managers who have business expertise across most UK sectors. They also boast over 50 years of experience supporting UK businesses.
Natwest - no minimum deposit
Natwest have three different business account levels: Small Business (through their digital business bank Mettle), Start Up and Business. All three have no minimum deposit requirement.
Natwest are experienced in dealing with all business sizes and scored highly in an independent survey of SMEs earlier this year.
Options outside the UK
If you’re looking for a non-resident business bank account outside the UK, here are a few providers to consider.
N26 - no minimum deposit
As mentioned previously, in the wake of Brexit, N26 withdrew from the UK. But they still offer business bank accounts to customers living in most European countries and the US.
There’s no minimum deposit. And, as well as a swanky metal card, perks include 0.5% cashback on all transactions, travel insurance and a fully online application process.
LeoPay - no minimum deposit
LeoPay is a digital banking alternative whose flexible approach to business banking is ideal if you’re looking to scale your business in the next few years. Their business accounts are available in over 40 countries including most of Europe.
As well as zero deposits, LeoPay don’t charge maintenance fees and online and POS payments are free. Plus, sign up is fully online.
Other business banking fees to look out for
Minimum deposits are not the only terms to weigh up when assessing business account options. It’s worth remembering that services which are free with your personal bank account often aren’t with business accounts.
Many banks charge for each international transaction, cheque deposit, cash withdrawal etc. Moreover, while many business bank accounts are free for the first year or two, after that many banks charge a monthly fee. Here are some of the most common charges to look out for:
- Account fees - often banks will lure you in with a free banking period. After this, you’ll be charged a monthly fee for holding an account. As an example, Revolut’s most popular account is £25 per month.
- Automated payment fees - most banks charge per direct debit payment and for each ATM withdrawal etc. Although these fees tend to be quite small they quickly add up. To give you an idea, Royal Bank of Scotland charges 35p per item.
- Cash payment fees - if you ever deposit or withdraw cash in a branch, you’ll also be charged. At Natwest, the charge is 0.7% or 70p per £100 withdrawn or deposited.
- International transactions - if you’re likely to be making a lot of non-Sterling transactions, you’ll want to read the small print when it comes to international payments. With HSBC, you’ll be charged a minimum of £1.75 plus 2.75% of the amount you convert.
- Overdraft fees - there are a multitude of fees associated with overdrafts. You’ll need to carefully consider arrangement fees, unauthorised overdraft fees and authorised overdraft EARs to name just a few.
Open can help
We hope this has been helpful in introducing some of the business banking options available to you as a non-resident. If you have any questions about opening a business bank account, please get in touch.
At Open, we’re familiar with all the nuances associated with opening a business account as a non-resident and we can get you banking in no time.