If we could impose one habit on every new sole trader, it would not be a spreadsheet or a tax course. It would be a separate business bank account, opened in week one. Mixing business and personal money is the single biggest cause of the year-two bookkeeping nightmare, and it is the easiest problem in the world to never have.
When people ask which account, we point them at Mettle, by NatWest. Below is why, what it actually costs, and — the section most reviews skip — the four things it will not do, so you find out now rather than in the middle of a job.
First, the legal position, because it is not what people think
A sole trader is not legally required to hold a business bank account. You and the business are the same legal person, and HMRC does not mandate a separate account. That is the technically correct answer, and it is why so many people spend their first year running everything through their personal current account.
Two things make it a bad idea anyway. The first is that most personal account terms and conditions prohibit business use, so the account you are relying on can be closed at the bank's discretion at exactly the wrong moment. The second is arithmetic. A year of mixed transactions has to be separated by somebody before a tax return can be filed, and that somebody is either you on a Sunday in January or an accountant charging by the hour. A separate account does that sorting for free, every day, in advance.
It is £0 a month, and that matters more than it sounds
Mettle's standard account has no monthly fee. UK transfers in and out are free. For a sole trader — particularly one in the first couple of years, or running a modest income alongside other work — paying £5 to £15 a month for a business account is hard to justify when a free one from a major UK bank exists.
Route A — paid challenger account plus bookkeeping software: £9 a month for the account and £19 a month for the software. That is £28 a month, £336 a year, £1,008 over three years.
Route B — Mettle plus the included FreeAgent: £0 a month for the account and £0 for the software, so long as at least one transaction goes through the account each month. Three-year cost: £0.
The difference, £1,008, is roughly four weeks of that hairdresser's takings. Neither route makes her a better hairdresser. One of them just stops charging her for the privilege of being organised.
It is a NatWest account, and the protection has gone up
Mettle is provided by NatWest and is FCA-regulated, with eligible funds protected by the Financial Services Compensation Scheme up to £120,000. That limit is worth stating precisely because it changed recently: the Prudential Regulation Authority raised the deposit protection limit from £85,000 to £120,000 with effect from 1 December 2025, the first change since 2017. It is per person, per authorised firm — so if you also hold personal savings with NatWest, the limit covers the combined total across the two, not £120,000 each.
The practical reassurance is that it is app-first and quick to open, but with an established bank behind it. You are not weighing up whether your working capital is safe with a brand you first heard of last week.
The free FreeAgent is the real prize, and 2026 is why
Mettle customers get FreeAgent included at no cost, provided at least one transaction goes through the Mettle account each month. Bought directly, FreeAgent costs upwards of £150 a year.
The timing matters. Making Tax Digital for Income Tax started on 6 April 2026 for sole traders and landlords with qualifying income over £50,000, based on the 2024/25 return. In scope means keeping digital records and sending HMRC a quarterly update through compatible software, then a final declaration. The standard update periods run to 5 July, 5 October, 5 January and 5 April, with deadlines of 7 August, 7 November, 7 February and 7 May respectively. The threshold falls to £30,000 from April 2027 and £20,000 from April 2028, which pulls in a very large number of sole traders who have never used accounting software in their lives.
That turns "compatible software" from an optional convenience into a filing requirement. Getting it bundled with a free bank account, rather than as another subscription, is the single most useful thing about this combination. Transactions flow from Mettle into FreeAgent already categorised, so the weekly bookkeeping is fifteen minutes of tapping approve rather than an evening of typing. You snap receipts on your phone, and a live estimate of your tax bill builds through the year instead of arriving as a surprise in January. Our guide to MTD for sole traders sets out what to do if you are in scope now.
Four limits worth knowing before you open one
No account suits everyone, and these are the specific points where Mettle is the wrong tool:
- No international payments. Mettle does not send or receive international transfers. If you buy materials from abroad or invoice overseas clients, this is disqualifying on its own — the Mastercard works abroad for card spending, but that is not the same thing.
- Cash is limited. You can pay in cash at a Post Office branch, but only up to £500 a day and £23,000 a year. For a market trader or a cash-heavy salon, that ceiling arrives quickly.
- No cheques, no overdraft, no credit facility. If you still receive cheques, or you rely on an arranged overdraft to smooth a lumpy month, you need an account that offers them.
- Eligibility and access are narrow. It is open to sole traders and limited companies with up to two owners, and only one owner can access the account. As a sole trader you are squarely in scope, but taking on a partner or incorporating with several directors can change the fit.
One more piece of honest detail: in-app invoicing and quotes are not in the free tier. Quote creation, automatic quote-to-invoice conversion and automated client reminders sit in Mettle+, an optional £4 a month. Most of our clients do not need it, because FreeAgent already raises invoices and sends the chasing emails — which is the part that actually gets you paid, as our post on invoicing that gets paid faster explains. But if you saw "free invoicing" quoted elsewhere, that is the distinction.
Setting it up so it stays clean
- Open the account before you take the first payment. Retrofitting is the expensive version.
- Put every business receipt and every business payment through it. No exceptions, including the £4 domain renewal.
- Pay yourself by a single regular transfer from the business account to your personal one. Sole traders are free to take money out whenever they like, but one predictable transfer a month makes both sets of statements readable — to you, to your accountant, and to a mortgage lender.
- Connect FreeAgent on day one and approve the transactions weekly. Fifteen minutes on a Friday is the whole job.
- Move a fixed share of every payment into a savings pot for tax. Roughly a quarter to a third of profit is the usual starting point, refined once your first return is filed.
The habit that saves the most
Everything downstream — clean books, expenses you actually claim, a tax return that takes an afternoon rather than a weekend, quarterly MTD updates that are non-events — starts with business money living in its own account. If you would rather see the options side by side first, we have compared them in Mettle vs Tide vs Starling and head-to-head in Tide vs Starling.
A free Mettle account, FreeAgent at no extra cost, and a named accountant is the entire set-up, from £19 + VAT a month. See how Mettle works alongside us, or get started.
