As an entrepreneur or small business, you may be selling or importing goods from the United Kingdom. In order to run your operations effectively, you need to be able to bank your money in the UK. It is important to have a UK bank account as it will be easy for you to make payments and receive any returns on purchases of goods or services. And, if you’ve heard horror stories about opening a bank account in the UK, don’t be alarmed. This article will give you some quick tips on how to open a bank account in the UK using alternative challenger banks.
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The UK banking sector is made up of traditional banks such as HSBC, Nationwide, Santander, Lloyds, Royal Bank of Scotland, Barclays, and NatWest. In order to open an account in a challenger bank, you need to have a U.K. address and proof of residency.
Although traditional banks have a renowned position across the banking world, several challenger banks can enable you to bank from another county. Digital banks such as Monzo, Revolut, and Wise are ideal for foreigners or entrepreneurs that live in another country. At these banks, you can open a bank account, own a sort code and account number, which enables you to make transactions both in and outside the UK.
There are different bank account types, but most people prefer to bank in the UK using a current account. They are ideal for everyday business needs and transactions such as paying bills, payrolls, and VAT. These accounts usually arrive with a debit card as well as an overdraft. Additionally, new clients are no longer given cheque books, but you can request one if you bank with a traditional institution such as Barclays or Nationwide.
However, savings accounts tend to pay higher interest rates and are intended for businesses who are looking to save cash for less accommodating times. Even so, some traditional banks pay interest on currency accounts, provided that your account balance remains above a certain threshold.
To open a UK bank account, you need the following documents;
1). The UK or foreign passport or a UK national identity card as proof of identity. Foreigners are advised to use their passports even in cases where an EU national identity card is deemed acceptable.
2). Secondly, you need a recent utility bill or council tax bill as proof of address. The majority of banks do not accept phone bills even if they have a UK address.
For people who recently moved to the UK or live in another country, providing proof of address is usually challenging. However, this is the primary requirement for traditional banks. This is especially challenging if you arrive in the UK and are living with family. Most individuals do not have any bills or contracts in their name. As a result, it might be preferable to use one of the challenger banks. These digital banks, such as Monzo, Revolut, and Wise enable you to open a bank account in the UK without burdensome requirements.
The cards issued by these companies can be used in stores and online to make purchases. Each service equally has its own set of requirements, so be sure to know the details of the account you may be getting as well as withdrawal and bank charges.
Option 1: Wise – Our TOP PICK
If you own a Wise multi currency account, you will be able to make payments in and outside the UK. Once you open your bank account, you will equally need to authenticate your identity through their interface. Upon completing this, you have the option of providing proof of address with a selfie. This is a novel and effective way of providing proof of address for non-UK residents or foreigners.
Option 2: Monese
Monese is equally a new challenger bank that enables you to bank in the UK as a foreigner. You can access all functionalities from its app. Monese is equally the perfect app for businesses and foreigners that make payments abroad or in multiple countries. For example, after BREXIT, you may need to pay VAT in both the UK and EU. Such a card can enable you to make VAT payments without any hassle and equally makes payments using mid-market exchange rates, so you are sure to be paying a fair price when you transact online and offline.
Option 3: Monzo
Finally, Monzo is one of the more popular digital banks in the UK. It provides full account and payment functions for foreigners and Uk citizens. It is good at monitoring payments as you can get a prepaid card with a limit and spend this on items or services that are useful for your business, such as VAT.
Another advantage of Monzo is that paying with your debit card is free, even when you pay or bank from abroad. However, there is a cost associated with withdrawing cash from an ATM. Even so, this option is ideal for businesses and foreigners in the e-commerce sector. You can equally link this to your HMRC gateway account to set up direct debits and pay your VAT bill on time.
Opening a bank account in the UK can be challenging, however, several digital and challenger banks such as Monzo, Monese, and Wise can enable you to bank in the UK effectively.
Monese charges 2% for ATM withdrawals after the £200 free allowance. Furthermore, you are equally charged 2% on foreign currency withdrawals after an initial allowance of £2000. This makes it ideal for both online transfers and offline purchases.
If you use Monese or Monzo, you will likely incur some charges when you withdraw from the ATM. However, each bank has a different policy for withdrawals, which they provide when you sign up for a card.
The majority of banks do not charge for a current account, especially challenger banks. While Monzo and Monese have fixed charges, Revolut is a digital banking alternative that charges no monthly fee.