If you are an entrepreneur seeking a business bank account for non-UK residents, read on, this article is for you. Now that you have registered your business at the UK Companies House, you are searching for a business bank account for your company. Being a non-resident foreigner, you wonder if your application for a business bank account would be accepted at a traditional high-street bank. Let us go through your options as a non-resident foreigner, and how to open a business bank account for your company, in the UK.
This article at a glance:
Opening a business bank account might pose a challenge for foreigners who are non-residents of the United Kingdom. Residency in the UK is usually required by traditional UK banks. As a limited company, you need a business bank account. Virtual banks are one of the most convenient options for entrepreneurs, as onboarding is fast and banking services are offered fully online.
Do I Need To Have a Business Bank Account For My Business?
Sole traders and freelancers are not legally required to have a separate UK bank account. The United Kingdom's Her Majesty's Revenue and Customs (or the HMRC, the UK's tax, payments and customs authority), states that business transactions records, however, should be kept separate from your personal ones, without the need to maintain a different UK bank account. This would make it easier for you to file your tax return. Nevertheless, using your personal accounts for your sole trader or freelance business purposes is still subject to your bank's terms and conditions, as certain banks prohibit their customers from doing so.
If you own a limited company registered at the Companies House, your business is legally required to have a dedicated business bank account. This is because a limited company has its own legal obligations and finances, being a separate legal entity. Despite this, it is not mandatory that your UK company owns a business UK bank account. You may choose to maintain your own business bank account outside of the UK.
Having a business bank account helps you to save on administrative time when filing tax returns with the HMRC, and builds up your business’ credit rating. It would also portray a more professional image to your suppliers and clients, and would gain you access to more business support, tools and resources.
Is It Easy For Foreigners To Open a Business Bank Account in the UK? What Are The Challenges Non-UK Residents Face To Open a UK Business Bank Account?
In short, it is not easy for a foreigner and non-UK resident to open a UK business bank account. This is because there are strict anti-money laundering regulations in place in the UK. Most high street banks such as Barclays and LLoyds, either do not offer business bank accounts for non-UK residents, or it is quite challenging to open one with them. There would be a high level of background and credit checks, and close scrutiny on non-resident directors to set up a business bank account for a foreign corporate entity in the UK.
Working and living in the UK is the most direct way for the high-street banks to offer you a business bank account as a foreigner. Your next best alternative is to bank with an international global institution that has a presence in both your country of residence and the UK, such as HSBC, Citibank and Santander. They might be able to offer you a specialist UK business bank account for non-residents. Another option is virtual banking for your business, which we will cover later below.
Do I Have To Live in the UK To Open a Business Bank Account?
Generally, proof of residency is required by UK banks in order to open a business bank account. You can furnish your tenancy agreement or utility bill as proof of residency, as long as:
- Your address of residence and the registered office address are different.
- Your listed address is a residential property (not a warehouse, co-working space, garage, etc.).
- You stay in the UK for a minimum of 183 days per year after buying or renting the property to be legally considered as resident.
If you do not plan to stay in the UK, as mentioned before, applying for an international business bank account is the next best option. Being the director of a company registered with UK Companies House, you can also open an online business bank account through online banking apps and payment providers like TransferWise, Revolut, Tide, Silverbird, N26, and Monese.
What Are My Options as a Non-UK Resident To Open a Business Bank Account?
As a non-UK resident, to open a bank account in the UK for your business, you can consider these options:
- UK banks. Although the process and criteria are quite stringent, it is not impossible to open a business account with traditional UK high-street banks. Usually, the non-resident director must at least visit a UK bank branch in person, or deposit and maintain a minimum amount of money, for him to open a business account as a non-resident. Terms and conditions vary from bank to bank; do enquire at the banks (e.g. HSBC, Lloyds, Royal Bank of Scotland, Barclays, etc.) directly.
- Banks with branches both at your location and in the UK (e.g. Bank of China and Union Bank of India). Check whether these banks offer international business bank accounts that could be used in the UK. The fees that they offer might be higher than UK banks and virtual banks, but they are worth looking into if you have a good and longstanding working relationship with your local bank.
- Online payment platforms and virtual banking accounts (e.g. Monese, TransferWise, Silverbird, Revolut, etc.). These online payments and banking platforms are a viable solution for entrepreneurs and business owners who are non-UK residents. Just like regular UK banks, they issue UK bank account numbers, sort codes, and IBANs (International Business Account Number).
Most of the virtual banks and payment platforms also issue credit cards, and allow HMRC VAT refunds to be credited into the accounts. You can send and receive payments, withdraw money from an ATM, make bank transfers, and connect to marketplaces like Amazon to receive payments.
What Are the Benefits of a Virtual Bank Account?
Virtual banks do not have physical branches, thus reducing costs in the form of rent and staff salary. They pass on these savings to their customers, and so could offer more competitive exchange and transfer rates compared to traditional banks. Additionally, they also handle accounts in multiple currencies and across different channels; sending and receiving payments are done almost instantaneously. The services that virtual banks offer are accessible 24/7 online, offering flexibility to business owners to complete their transactions anywhere and anytime. Setting up a virtual business bank account could be done 100% online too, and a non-resident company director does not need to visit a UK bank branch in person to open one.
What Are the Features of a Virtual Bank Account?
Virtual banks employ a digital-first strategy to banking and present their banking services via a customer-centric perspective. These are some of the common features of a virtual bank account:
- Easy Account Opening. Setting up an online bank account is usually done in minutes, and you could use the banking services quickly, usually after submitting your ID for verification.
- Electronic Statements. There are no paper statements issued, which is both environmentally-friendly and easier to access for a user, since all past transactions are just clicks away.
- Alerts and Notifications. Users receive alerts and notifications immediately (if they opt for so) for their transactions.
- UK virtual banks offer a UK bank account number, sort code, and IBAN (International Business Account Number), just like a regular bank.
- Quick payments and transfers. Sending (e.g. to suppliers or the HMRC), and receiving payments (e.g. from online marketplaces like Amazon and eBay), and making bank transfers are a breeze. Credit or ATM cards may be issued too which you could use to withdraw funds in and outside the UK.
What Are The Required Documents To Open a Virtual Bank Account?
The documents that virtual banks require vary from bank to bank. These are the documents most commonly required by virtual banks:
- Identification Card (Passport, Driving License, ID card, etc.);
- Tenancy or mortgage agreement;
- Utility bill or bank statement (proof of address dated less than 3 months old);
- Recent tax bill.
Virtual banks might also conduct interviews over the phone or via video call for verification and screening purposes, and they will contact you if they require additional documents.
How Long Does It Take To Open a Virtual Bank Account?
The time that it takes to open a virtual bank depends on each bank. Usually, you can open a virtual business bank account in minutes. However, your access to the banking services would be granted within a few days or weeks, after identity and document verifications.
At Silverbird, your international business bank account opening is simplified and no branch visit is required. You do not need to send in any paper documents either. You would submit your application online which takes minutes, and our team will contact you within a few business days to welcome you onboard. Do contact us today to discuss with us your business’ banking needs.
Author: Syahirah Aiman
Illustration: Kate Faldina