How does a business savings account work?
Any deposits you make will earn interest for the period of time they remain in the account. Typically, interest is calculated every day and paid monthly.
For example:
- If you deposit £10,000 in an easy access account at AER 2.53%, and don’t make any withdrawals, after 12 months your balance would be £10,253
You have to pay taxes on any interest you earn as it is considered profit. If you’re a limited company, you’ll pay capital gains. If you’re a sole trader, you’ll pay income tax on anything above the tax free allowance.
The pros and cons of savings
Pros
- There’s a variety of savings account types to suit different needs and preferences
- Maximise the value of your revenue by earning interest on surplus funds
- Ringfence cash to use for particular liabilities and goals later on
Cons
- Interest rates can vary considerably and be much lower after the introductory offer
- You may have to lock your funds away for several years to access the best interest rates
- Many accounts come with restrictions, which can be frustrating if they don’t align with your business goals
The best business savings accounts for UK small businesses
(Last updated 30 April 2026)
How to choose the right business savings account
To choose the right account, first establish your business savings goals and priorities. For example, do you need to be able to make withdrawals or are you happy to forgo access to your funds until they reach maturity?
Here are three typical scenarios and the most suitable accounts for each one.
I want to earn interest on my surplus funds, but I want to be able to withdraw funds to cover expenses or take advantage of growth opportunities.
- Open an easy access savings account. Most allow you to make withdrawals whenever you need, though you may sacrifice a higher level of interest for the privilege.
I want to earn a decent interest rate and I don’t need immediate access to my savings, but I want some flexibility.
- Choose a notice account. You’ll earn a decent level of interest and you’ll be able to make withdrawals provided you give sufficient notice.
I’m happy to lock away my funds for an extended period of time to maximise my interest.
- A fixed term account is the one for you. You won’t be able to make any withdrawals but you’ll have the best return on your deposits.
You should also consider the:
- Minimum: Some minimum deposits can be as low as £1, while others can be upwards of £5,000. If you can’t afford to deposit the minimum, it’s not the account for you.
- Maximum: If you have a lot of spare funds, ensure the savings account has a high enough deposit ceiling to make the most of your savings.
Tired of multiple applications?
See also: Small business savings account comparison
How do traditional banks compare?
| Easy Access | 6-month Fixed Rate | 12-month Fixed Rate | 95-day Notice | |
| Barclays | 1.05% AER (variable) | N/A | N/A | N/A |
| HSBC UK | 1.33% AER (variable) | 3.18% gross | N/A | N/A |
| Lloyds Bank | 0.60% AER (variable) | 2.05% AER | 2.04% AER | 2.66% AER (variable) |
| Santander | 0.80% AER (variable) | N/A | 2.20% AER | N/A |
| Virgin (Nationwide) | 3.50% AER (variable) | 3.38% AER | 3.70% AER | 3.25% AER (variable) |
What is a business savings account?
A business savings account is similar to a personal savings account only it is used specifically by the business. Cash reserves are placed into this account and earn interest, unlike most current accounts which do not offer interest.
Some business savings accounts require a minimum initial deposit to open the account.
A business savings account allows you to earn interest on reserves and keep funds separate from a current account.
What is AER?
AER stands for Annual Equivalent Rate, which shows the interest earned on a savings account if it was held over a full year, taking into account compounding interest.
A Variable AER means that the interest rate can change depending on market conditions or the Bank of England raising or lowering the base rate.
A Fixed AER is when the interest rate stays the same over a set period of time (for example 1 year).
How to choose the right account
While the interest rate (AER) is an important consideration, it is also important to check that the provider is covered by the Financial Services Compensation Scheme (FSCS).
What is FSCS protection?
FSCS protection is a compensation scheme for customers of UK authorized financial services firms. It covers up to £120,000 per eligible person, per bank/building society/credit union if the firm fails.
Do businesses get FSCS protection?
If you run your business as a separate legal entity (such as a limited company or LLP) it will receive FSCS protection (£120,000 per UK banking institution). If your personal account is with the same bank provider as your limited company/LLP, your protection would be £120,000 for your business account, and £120,000 for your personal account.
If you run your business as a sole trader, your business and personal accounts will be aggregated together. This means that if your personal account is with the same bank provider as your sole trader business account, you would only be able to claim £120,000 total.
What is a cash savings platform?
A cash savings platform – also known as a cash deposit aggregator – allows you to open and manage multiple savings accounts from different providers in one online hub.
Rather than submit an application to each bank to open a new savings account, you only need to complete your initial application to the platform, saving you a lot of time. If you have more than £120,000 in your bank, you can also use a cash savings platform to increase your FSCS protection.
Comparison table of cash savings platforms available to businesses
| Provider | Minimum Deposit | Platform Fees | Number of providers | Top Instant Access Rate |
| Akoni | £1 | Up to 0.25% of deposit and 0.2% interest share | 20+ | 3.61% AER
|
| Bondsmith | £100,000 | Unspecified interest share | 8+ | Not specified on website |
| Flagstone | £100,000 | 0.3% interest share | 40+ | 3.56% AER |
| Insignis | Not specified | Up to 0.25% of deposit | 15+ | Not specified |
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