Has your business made extra money this month? If you’re not going to use it to directly fund your operations, you could put it to work in a savings account. Our guide explains what you need to know.
If you leave your funds in a business current account chances are it’ll make little to no interest. That’s why many businesses choose to open a savings account.
You don’t necessarily need to keep your money locked away over an extended period, and it also makes your cash work harder for you.
In this article we explore:
- What are business savings accounts?
- What are the best business savings accounts?
- Which savings account is best for my business?
- Do I pay tax on business savings accounts?
Read more: Best business bank accounts
What are business savings accounts?
Business savings accounts allow you to earn interest on your money. This could be a deposit from excess cash flow or added capital. Business savings accounts carry the same principles as savings accounts for general consumers, so you’ll find a mix of variable and fixed rate options on the market.
As you’ll find in this article, keeping your business’s savings under a personal name has tax implications – and can make things tricky for your accountant. So it may be something you wish to consider when choosing the right account.
Get £80 cashback when you open a Tide business account
Open a business current account with Tide and you could earn yourself £80 cashback. To qualify, you need to successfully apply before 30 April, use the code £80CASHBACK at checkout, and spend £100 within 30 days of account opening.
Tide’s business current account comes with no monthly fee, a market-leading business easy access account, and free invoicing from the Tide app.
What are the best business savings accounts?
The best savings rates depend on what type of account you’re comparing. So, below we list and explain what type of accounts are included on the market:
Easy access
An easy access account allows you to withdraw from your savings at a moment’s notice. These accounts offer variable rates of interest, which means your returns will likely fluctuate.
Currently, Tide offers the best rate in this sector at 4.33%. Like the other accounts listed below, your money with Tide is fully protected by the FSCS.
| Provider | Account name | Interest rate (AER) | Min/max deposit | Account access | |
|---|---|---|---|---|---|
 | Tide Business Savings Account * | 4.33% | £1 / £1,000,000 | Online / Mobile | More info |
 | Easy Access Business Account Issue 12 | 4.01% | £1,000 / £85,000 | Online / Post | |
 Sponsored | Easy access account * | 3.25% | £1,000 / £1,000,000 | Online | More info |
| This listing is sponsored by Aldermore | |||||
 | Easy Access Business Savings Account (Issue 1) | 4.01% | £20,000 / £100,000 | Online | |
 | Business Saver – Issue 5 * | 4.00% | £1 / £10,000,000 | Online | More info |
 | Business Access Savings Account Issue 33 | 3.80% | £1 / £2,000,000 | Online | |
Powered by data from Savings Champion
Fixed rate
Virgin Money and Shawbrook Bank are two providers which still offers a rate above 5%.
| Provider | Account name | Interest rate (AER) | Min/max deposit | Account access | |
|---|---|---|---|---|---|
| | 1 Year Business Fixed Rate Savings Account Issue 142 | 5.15% | £1 / £2,000,000 | Online | |
 | 18 Month Fixed Term Deposit | 5.10% | £100,000 / £5,000,000 | Email / Post / Telephone | |
| Sponsored | Fixed rate business savings account (1 year) * | 4.51% | £1,000 / £1,000,000 | Online | More info |
| This listing is sponsored by Aldermore | |||||
| | 2 Year Fixed Term Deposit | 5.05% | £100,000 / £5,000,000 | Email / Post / Telephone | |
| | 3 Year Fixed Term Deposit | 4.75% | £100,000 / £5,000,000 | Email / Post / Telephone | |
| | 5 Year Fixed Term Deposit | 4.55% | £100,000 / £5,000,000 | Email / Post / Telephone | |
Powered by data from Savings Champion
Notice account
Sometimes a notice account can be a happy medium between a fixed rate bond and an easy access account. These savings accounts offer a variable rate of interest, but require you to hand in notice before accessing your cash. Generally, the higher the notice the better the rate.
United Trust Bank’s 180 Day Notice Base Rate Tracker pays a rate of 5.25%, one of the best on the market. It will also fluctuate in line with the Bank of England’s base rate, so by diarising the upcoming MPC meetings you can get some expectation when your interest will rise or fall.
| Provider | Account name | Interest rate (AER) | Min/max deposit | Account access | |
|---|---|---|---|---|---|
 | Business 180 Day Notice Base Rate Tracker | 5.25% | £5,000 / £500,000 | Email / Online / Post | |
| | 180-day Notice Savings Account (Issue 1) | 5.01% | £20,000 / £250,000 | Email / MobileBanking / Online / Telephone / Mobile | |
| | Business 200d Notice Account Issue 2 | 5.00% | £5,000 / £1,000,000 | Email / Online / Post | |
 | Business 180 Day | 5.00% | £25,000 / £500,000 | Branch / Online / Post | |
 | Business 120 – 120 Day Notice Business Deposit | 4.60% | £1,000 / £500,000 | Branch / Post / Telephone |
Powered by data from Savings Champion
Which savings account is best for my business?
The best savings account for your business will depend on a variety of factors. These include, but aren’t limited to your savings goals, if you want a fixed or variable rate of interest, and how frequently you wish to access your cash.
An easy access account may be best if your business wants to keep some money aside for an unexpected expense, while a fixed rate bond might be preferable if you’re looking to grow a portion of your excess cash flow.
Read more: How to start a business
Do I pay tax on business savings accounts?
No matter how small your business may be, your business savings account could be liable for tax.
All advertised rates are advertised as gross earnings, meaning if you’re due any tax this isn’t paid by your provider. Instead, you’ll need to declare the interest you’ve earned to the HMRC via a self-assessment tax return – these returns are due 31 January.
How much tax you’ll pay will also depend on your company set-up. A sole-trader, for example, could include their interest as part of their taxable income. Meanwhile, a limited company is liable for corporation tax. So their interest will form part of their profits and your tax will be based on your financial year-end statement.
Read more: Guide to small business tax
Are business savings accounts protected?
Like savings accounts for individuals, business savings accounts benefit from FSCS protection too. This means if your business savings account provider goes bust, you can recoup up to £85,000 of your losses.
It is important to remember that in these instances the FSCS offers protection for every legal entity, not every individual. A legal entity can be defined as a registered organisation that has legal responsibilities, like a limited company or limited liability partnership.
So, if you have three separate businesses, they could all benefit from separate FSCS protection. The exception here is if all your companies fall under one legal entity, then it is treated as a single claim.
It is worth noting that authorised financial services firms don’t benefit from this protection.
Important information
Some of the products promoted are from our affiliate partners from whom we receive compensation. While we aim to feature some of the best products available, we cannot review every product on the market.
