Written by the TaxTune Editorial Team · Reviewed by our qualified accountants · Updated for 2026
The quick answer A limited company must keep its money separate, so it needs its own bank account. A sole trader is not legally required to have one, but a separate account is strongly recommended because it makes bookkeeping, expense claims and tax far cleaner and easier to defend.

The rules and the reasons

  1. Companies must separate. A limited company is a separate legal entity, so its money cannot be mixed with your personal funds.
  2. Sole traders are not required to, but mixing personal and business money makes records messy and costs you missed claims.
  3. A separate account makes tax easy. Every business transaction is in one place, so income and expenses are simple to total and reconcile.
  4. It protects you in a check. Clean, separated records are far easier to explain if HMRC ever asks.

Getting it right

Whether you are a sole trader or a company, running business money through its own account, keeping personal spending out of it, and paying yourself a clear drawing or salary makes every future filing quicker and cheaper. It is a small habit that pays back all year.

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A tidy account and simple bookkeeping make tax quick and cheap. TaxTune helps you set it up and keeps your records straight so filing is never a scramble.

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Frequently asked questions

Do I need a business bank account?

A limited company must have its own account, as it is a separate legal entity. A sole trader is not legally required to, but a separate account is strongly recommended for clean records.

Can I use my personal account as a sole trader?

You legally can, but it is a false economy. Mixing personal and business money makes bookkeeping harder, leads to missed expense claims, and is harder to explain if HMRC checks.

Why does a separate account help with tax?

Every business transaction sits in one place, so income and expenses are easy to total and reconcile, which makes your return quicker, cheaper and more accurate.

Does a business account cost money?

Some charge fees and some are free, particularly for sole traders and small businesses. The time and accuracy it saves usually outweighs any modest cost.

What if I have mixed personal and business spending?

Separate them going forward, and a good bookkeeper can untangle the past. Cleaning it up reduces the risk of missed claims and errors on your return.