Business account or personal account for a side hustle?
Important: This guide provides general information, not personalised financial advice. Financial products, rates and eligibility rules can change, so check the provider’s current terms before applying. You can check a firm’s details on the FCA Register.
Quick answer
Sole traders aren’t legally required to have a separate business account, but many banks’ personal account terms don’t allow business use, and keeping money separate makes records and tax returns easier. Limited companies need a business account.
If your gross trading income is £1,000 or less in a tax year, the trading allowance means you may not need to tell HMRC (there are exceptions).
Side by side
| Point | Personal account | Business account |
|---|---|---|
| Allowed for business use? | Depends on bank terms | Yes |
| Cost | Usually free | Free options exist; some charge |
| Record-keeping | Mixed with personal spending | Separate |
| Invoicing and tax tools | Rare | Often included |
| Required for limited companies? | No — not allowed | Yes |
Trading allowance from GOV.UK, as of 4 October 2026. General information, not advice.
Who it’s for
- Personal account: very small, occasional side income — if your bank’s terms allow it
- Business account: regular side income, or anyone who wants clean records
Who should skip it
These are general points to weigh up, not advice. You may want to look elsewhere if:
- You trade through a limited company — you need a business account
Full explanation
If gross trading income goes over £1,000, you can claim the trading allowance instead of expenses, or deduct actual expenses — whichever suits you.
Free accounts such as Business Go from Zempler, or app-based accounts, can be a simple way to keep things separate.
The catch
Using a personal account against your bank’s terms can lead to it being closed. Many business accounts are free, so separating may cost nothing.
FAQs
Do I need a business account for a side hustle?
Not legally as a sole trader, but check your bank’s terms and consider separating for records.
What is the trading allowance?
Up to £1,000 a year of tax-free trading income.
Do I need to register as self-employed?
If gross trading income is over £1,000, you usually do. Check GOV.UK.
Can I use a free business account?
Yes, several have no monthly fee.
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