Business savings

Running a business isn’t easy, especially if you have to manage staff, clients and cash flow. A good current account can help your business operate more efficiently. So, too, can a business savings account.

Fixed rate savings accounts - sponsored accounts

    • Provider/Product name Customised Fixed Rate Business Savings Account

      Aldermore

      Customised Fixed Rate Business Savings Account

    • Interest Rate (AER)

      Min 1.20%
      to
      Max 3.00%

    • Access notes and qualifying criteria

      Minimum investment £1,000
      You can access this account online or via telephone
      Any term available from 60 days to 5 years from today – choose the exact maturity date to meet your needs to see the rate available

    • Go to site

    Great for
    FSCS covers up to £85k of deposits
    A choice between interest paid monthly or on maturity
    A maximum investment of £1,000,000
    But be aware that
    Interest rate dependent on term taken, refer to provider
    FSCS restrictions apply to businesses with: Turnover: not more than £6.5 million
    Balance sheet total: not more than £3.26 million. Total number of employees: not more than 50
  1. Great for
    FSCS covers up to £85k of deposits
    A choice between monthly or annual interest
    A maximum investment of £1,000,000
    But be aware that
    No additional deposits, early account closure or withdrawals are permitted within the fixed term
    FSCS restrictions apply to businesses with: Turnover: not more than £6.5 million
    Balance sheet total: not more than £3.26 million. Total number of employees: not more than 50
  2. Great for
    FSCS covers up to £85k of deposits
    A choice between interest paid monthly or on maturity
    A maximum investment of £1,000,000
    But be aware that
    No additional deposits, early account closure or withdrawals are permitted within the fixed term
    FSCS restrictions apply to businesses with: Turnover: not more than £6.5 million
    Balance sheet total: not more than £3.26 million. Total number of employees: not more than 50

Notice savings accounts - sponsored accounts

    • Provider/Product name Business 95 Day Notice Account

      Bank of Cyprus UK

      Business 95 Day Notice Account

    • Interest Rate (AER)

      1.36%

    • Access notes and qualifying criteria

      Minimum investment £1,000
      You can access this account online, in branch, by post or via telephone
      To make withdrawals or transfers you must give at least 95 days' notice

    • Go to site

    Great for
    FSCS covers up to £85k of deposits
    1.10% AER for balances £1,000 - £94,999 & 1.36% for £95,000+
    Maximum investment £5,000,000
    But be aware that
    FSCS restrictions apply to businesses with: Turnover: not more than £6.5 million
    Balance sheet total: not more than £3.26 million. Total number of employees: not more than 50
    • Provider/Product name Business Tracker Issue 5

      Manchester Building Society

      Business Tracker Issue 5

    • Interest Rate (AER)

      1.15%

    • Access notes and qualifying criteria

      Minimum investment £10,000
      You can access this account by post, in branch or agency
      To make withdrawals or transfers you must give at least 60 days’ notice
      Product available to Sole Traders, Partnerships, Limited Liability Partnerships (LLPs), Registered Charities and Private Companies

    • Go to site

    Great for
    The interest rate will be 0.65% above the Bank of England Base Rate until 30th September 2015
    FSCS covers up to £85k of deposits
    Maximum investment £75,000
    But be aware that
    Only one account can be opened per business
    FSCS restrictions apply to businesses with: Turnover: not more than £6.5 million
    Balance sheet total: not more than £3.26 million. Total number of employees: not more than 50

Easy access accounts

  1. Great for
    FSCS covers up to £85k of deposits
    Unlimited penalty-free withdrawals
    Maximum investment £1,000,000
    But be aware that
    FSCS restrictions apply to businesses with: Turnover: not more than £6.5 million
    Balance sheet total: not more than £3.26 million. Total number of employees: not more than 50

Business savings accounts guide

What are business savings accounts?

A business savings account is similar to an ordinary savings account – except it is designed specifically for business use.

If you have a business current account or deposit account and have built up a sizeable balance, you should look to move that money into a business savings account, as you are likely to be earning next to nothing in your current account. By contrast, you can make your money work harder in a business savings account.

That said, if you are looking to move money out of a business savings account, you need to be aware that while some allow instant access to your money, others may require you to give notice before withdrawing funds.

Read more

What types of business savings accounts are available?

Business savings accounts are offered by most banks and building societies, so it’s worth looking around to what’s on offer.

If you think you’re going to need to get your hands on any surplus cash in a hurry, you’re best off opting for an easy access account – as you can get your money right away.

With this type of business savings account, the minimum balance is usually low, and generally speaking, you will be able to make as many deposits and withdrawals as you wish, without incurring a penalty.

On the downside, an easy access business account is unlikely to pay the most competitive rates; this is the price you pay for the flexibility of having access to your cash.

If you can cope with a little less flexibility, you may find there are higher rates up for grabs on a notice account. With one of these accounts, the notice period will vary, from 30 days to as long as 120 days.

While this may not be as appealing as an easy access account, this type of account can suit those who want to put money aside to pay regular bills – or even a tax bill.

The key to making a notice account work for you is being organised and planning ahead so that you can give the notice required before making a withdrawal, so as not to have to pay a penalty.

For those who can afford to lock their money away for a set period, there is a third option – a fixed-term bond.

With a fixed-term bond a rate is paid over a set period of time – and guaranteed not to change during the fixed term. The term is usually between one and three years during which time no withdrawals are permitted.

While the rates can be preferential on this type of account, they are only suitable if you are sure you will not need to access your money. They also only suit those with a lump sum as you can only usually make one deposit at the time the account is opened.

What are the advantages of business savings accounts?

With a business savings account, you will earn a higher rate of interest on your money than you would if you left it sitting in a business current account.

Generally speaking, the bank or building society that you hold a business savings account with will automatically deduct 20% from the interest. It is then down to you to make up any shortfall when you settle your annual tax bill.

But when choosing a business account, you need to be aware that some are based offshore, meaning interest is paid gross, before tax is deducted. Crucially, the accounts are not tax-free, but this kind of set-up can be advantageous, as you receive the interest gross – rather than net. As this type of set-up can be quite complicated, it is worth seeking professional advice from a tax adviser or accountant.

With a business savings account, you also need to scour the small print carefully, as some will come with strings attached, such as bonus rate which drops away after a certain period. While it can be useful to have the initial rate boosted by a bonus, you need to note down when it ends so you remember to review your account again at this time.

You also need to keep an eye out for restrictions on withdrawals, as if you fail to stay within the permitted number, you could find you are penalised.

In addition, you might also have to maintain a certain balance in the account to qualify of the headline rate; fail to do so, and you may lose interest.

How safe is a business savings account?

Given the ongoing economic uncertainty, you may well be concerned about the safety of your money.

The good news is, provided your bank or building society is regulated by City watchdog, the Financial Services Authority (FSA), you are covered under the Financial Services Compensation Scheme.

While this was set up to help individual customers, the protection also extends to small business as well and, in certain circumstances, larger businesses too.

Where the scheme applies, it safeguards the first £85,000 an eligible business has held under a single UK banking licence.

For more information, and to check if the institution you’re planning to bank with is part of the scheme, visit www.fscs.org.uk.

To avoid any panic, the key is to spread your cash around, to avoid having more than £85,000 with any one bank.

Further, when protecting savings, you need to be aware that FSCS coverage is per institution registered with the FSA, and that some institutions share a registration.Once again, the key is to spread money between banks and building societies to ensure it’s protected.

Why should you use MoneySupermarket.com to compare business savings accounts?

As there are a wide range of business savings accounts available with different rates and features, it’s important to do your research before making a choice.

The best way to do this is by logging onto a free and independent price comparison service such as MoneySupermarket where you can compare accounts on a like-for-life basis quickly and easily, helping you to make the right decision on the account that best suits your needs. 

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