UPDATE: It seems Nationwide have now tightened up on this, and said that ‘business use' would be reviewed on an individual basis. In the mean time, if you need a basic business account, we recommend you take at look at our overview of Cashplus, or CardOneBanking accounts. 

In November 2014 the Government reached a deal with UK banks to ensure the provision of fee free personal banking in the form of basic bank accounts.

Unfortunately when it comes to business there's no such thing as a basic bank account. Even the ‘no-frills' Natwest Foundation account requires that the owner/directors undergo a credit check.

That's a problem, since large numbers of entrepreneurs, freelancers, and would-be business owners are struggling to set up a dedicated business bank account for their business, whether due to previous bad credit or other reasons.

If you fall into this category then first see our guide on ‘How to open a business bank account with a poor credit history.

Self employed, sole traders, freelancers, contractors, small businesses

The difficulty in opening a business bank account leads many to continue to use their personal account. Let's clear one thing up first and for all. HMRC requires business owners to separate business and personal transactions, but there is no requirement for separate bank accounts.

In fact HRMC doesn't require you to have a bank account at all, though unless you're a market trader, or other ‘all cash' business, you'll find it difficult to operate without one.

You see many posts across internet forums by doom-sayers and scaremongers. Saying things like “using a personal account for business purposes kills kittens.” And that's terrible, kittens are cute.

It all stems from the bank's terms and conditions, which are likely to include a clause stating that ‘the account is for personal use, and should not be used for business.

By breaching these terms and conditions you are at risk of having your account closed, and where would that leave your fledgling business? Not that you couldn't open another basic account somewhere else mind.

Perhaps it's all that time spent studying contract law but I'm obsessed with semantics, and the phrases ‘used for business' or ‘business use' are certainly open to interpretation.

For clarification, I contacted a number of banks, and the results were (not that) surprising.

Now it's a given that if you have a limited company, you're not going to get away with using a personal bank account (see our guide on opening a business bank account). But what of all the sole traders out there? In my email to the banks I included a few scenarios:

A dance teacher working a number of schools in a local region being paid in either cash, cheque, or BACs, and all earnings being paid into a personal bank account.

A freelancer carrying out work for a single or multiple clients and being paid electronically, and paying for bills etc..

Here's what the banks said:


I can confirm that you can use the current account as a self employed individual to receive your wages from your clients/customers. Hence all the examples you've sited are not in breach of the terms and conditions of the current account, however it's your responsibility to declare your earnings to HMRC.


Any business transactions on an account are considered business use. For example; a dance teacher receiving money for services provided, a musician insuring his instruments or maybe paying a supplier. I hope this helps. Many thanks.


If you're self employed, this would be considered business use.



HSBC wouldn't comment directly. They said that they would need to discuss the specific merits of the business before being drawn on whether a business bank account would be required.


I actually know of number of people who've been using a Barclays personal account for their business for over 5 years. This was where the dance teacher scenario came from. Barclays however, were quite insistent to me that you'd need to open a business bank account under such circumstances.

We have a winner

So while that's not an exhaustive list, the answer is clear, that some banks don't consider self employed earning as ‘business use.' Nationwide seems the winner here, whilst the likes of TSB, Lloyds, and Barclays would all require a business bank account even for a babysitter.

Specifically it would make sense to look at the Nationwide Cash Card account, this is a basic account with no credit check, though those who's credit history is in order may prefer the benefits of the Flex Account.

A word of warning

It's important to note that the scenarios I approached the banks with were quite specific to freelance time-based workers such as graphic designers, gardeners, web developers, teachers etc.. What they all have in common is that they are like to have less than 20 or so ‘business transactions' per month since the transactions themselves are high value.

This is in stark contrast to the owner of a corner shop, or an eBay/Amazon seller. These types of activities are likely to involve many if not hundreds of small transactions and would likely require a full business account. See our guide on business bank accounts for more information.

The drawbacks of using a personal account

While using a personal account basic business transactions might be quick and easy, it does have a number of drawbacks.

  • Lack of professionalism
  • account not in business name
  • unable to cash cheques made out to the business
  • lack of separation – personal funds mixed with business funds

Basic business bank accounts with no credit checks

Using a personal bank account whilst doable isn't going to be ideal for most people. You are limited in the type of transactions you can carry out, and of course it's not in the business name. Add to that the time and inconvenience of identifying and separating your personal income/expenditure to that of your business, and you can see why even sole traders might seek out an alternative.

If you need a guaranteed business account as soon as possible then card-based alternatives in the form of Cashplus and CardOneBanking could be worth a look. The former has recently applied for a banking licence, so opening an account with Cashplus now, could be provide a back door method of gaining a fully fledged business bank account, without jumping though the hoops of the traditional banks.

These business accounts don't require a credit check, making them perfect for those with either bad, poor or no credit history. What's more, you could have an account up and running in as little as 24 hours. Bear in mind that both services have annual or monthly cover charges, and some basic transactions will cost. The good news is that all of these can be offset against profits thus reducing your tax liability. See our comparison of the two for more information or alternatively compare the top business current accounts.


  • James

    I found this article very useful but when enquiring at Nationwide myself (about being a sole trader / freelancer and using the description in this article) I received the following response:

    “Nationwide’s current are not permitted for use as a business account as its for personal use only. Nationwide currently do not provide a business current account.”

    • Carl Michael

      This is curious. I’ve gone back through Nationwide’s Twitter stream along with my on own for 26th March 2015 – 4th April 2015, and responses by other banks are there, but the Nationwide tweets are missing. I wonder if they have now changed tact and deleted them. Will look into it some more.

  • Eleni

    I am not sure how relevant my question is but I would be really grateful if you could advice me on this.

    I have a LTD company, and I manage to open an business bank account with HSBC.

    Although I haven’t use the account that much, I found out that they have really high fees for international payments.

    My problem is that I mostly do international payments, and I am thinking of using another bank account for the company

    I found an online banking system, revolut https://www.revolut.com
    Can I use it for my LTD company? They also offer a business account.

    I am wondering if its legal to use this type of bank for the company’s expenses and incomes.

    Many thanks,

    • Carl Michael

      Hi Eleni,

      We’re not aware of a Revolut Business account in the traditional banking sense, but they do offer business currency cards, and they would work for you considering you already have a standard business account. Totally legal,but do watch out, as fees may differ from the regular Revolut personal card.

  • Richard Adegboyega

    I sent an email to you a while ago asking for information about cashplus, the latest information about whether their application for full banking services have been granted. Any further update about this would be highly appreciated.

    • Carl Michael

      Hi Richard, the banking licence hasn’t been completed yet. These things take time. It could be up to a year, before their is any significant change. I’m sure once it is granted their PR machine will kick in and we’ll all know about it.

  • Jackie

    I recently got a letter from tesco. Saying they r giving me this 2 months notice if I don’t stop treating currant account as a business account. What I work I put money in and transfer it to get a better interest. I may buy things through PayPal. Never heard anything so stupid I rung up saying yes I put money money in from my work. They asked if I got paid by cash. Yes that’s why I put it in bank. They have told me to carry on and put note on system. I said its a bank. A bank u put money in and transfer. Good god. Never heard of anything so stupid I. If u want to be pety. May be I will stop shopping at tesco too.

  • Vinnie

    I’ve received duplicate letters from M&S — one for current account, one for their credit card. Both saying certain transactions are for business use. The credit card?! Nope. Wrong. The current account? *Maybe* there were one or two in the past few months whereby as a freelancer I was paid electronically for work completed. We’re talking a couple of hundred quid. My last bank didn’t have a problem with this for more than 20 years. Think I’ll be switching back. Seems a lot like bullying to me.

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