Payment Gateways
A payment gateway is the software layer that handles card and online payments on your behalf — it sits between your customer, the card networks, and your bank account. For sole traders and startups, the key factors are transaction fees, hardware availability, ease of setup, and whether the gateway integrates with your accounting software.
All five providers below are well-established in the UK market, carry no setup fees, and operate on pay-as-you-go models unless otherwise stated.
Stripe is the default payment infrastructure for UK startups for good reason: it is exceptionally well-documented, integrates natively with WooCommerce, Shopify, and virtually every major e-commerce platform, and its dashboard gives sole traders a clear view of revenue, payouts, and disputes from day one.
UK domestic card rates are among the lowest in the world thanks to UK interchange regulation. The important caveat post-Brexit is that EU-issued cards are now treated as international by Stripe UK — a French or German customer paying on your UK site costs you 2.5% + £0.20, not the 1.5% domestic rate. If you sell to European customers regularly, factor this into your margin calculations.
Square stands out for sole traders who operate across both online and physical channels. Its free POS software includes inventory management, customer records, and sales reporting that would cost extra with most competitors. The in-person card reader is the most affordable entry point on the market at £19, and Square typically settles payments within 1–2 working days.
The 1.4% + £0.25 online rate is slightly below Stripe’s domestic rate, making it genuinely competitive for online transactions. The main limitation is that Square’s ecosystem is less developer-friendly than Stripe and has fewer integrations with UK-specific accounting tools.
SumUp has built its reputation on simplicity and low upfront cost. The 1.69% pay-as-you-go in-person rate is the lowest flat rate of any major UK provider, with hardware from £25 + VAT and no monthly contracts. For sole traders who primarily take payments face-to-face — tradespeople, market vendors, mobile service providers — SumUp consistently offers better economics than Square or Zettle at lower volumes.
The Payments Plus subscription (£19/month) reduces the in-person fee to 0.99% and makes sense once you clear approximately £3,000 per month in card turnover. Note that online transaction fees of 2.50% are higher than Stripe and Square, so SumUp is not the right choice if your revenue is primarily online.
PayPal remains one of the most recognised payment methods in the UK, particularly in consumer e-commerce, which gives it a genuine conversion advantage on checkout. Many customers will choose to pay via PayPal when the option exists, especially on higher-value purchases where they value buyer protection. Zettle (PayPal’s in-person payments arm) brings that brand equity to physical transactions at a flat 1.75% with a £29 card reader.
The main weakness is the online standard rate of 2.9% + 30p — significantly higher than Stripe and Square. For a business doing £5,000/month online, that is approximately £80 more per month than Stripe. Offering PayPal as a supplementary checkout option alongside a lower-cost primary gateway (Stripe or Square) is often the optimal approach.
GoCardless is a fundamentally different proposition to the other payment gateways in this list: it handles Direct Debit and bank-to-bank payments exclusively, not card payments. That distinction matters because it is significantly cheaper for recurring billing — at 1% + 20p capped at £2, processing a £200 monthly retainer costs just £2.00 rather than the £3.20 it would cost via Stripe. It also eliminates chargebacks, since Direct Debit payments are authorised by the customer upfront.
The limitation is equally clear: customers cannot pay by card, Apple Pay, or Google Pay. GoCardless works best alongside a card gateway rather than instead of one. It integrates directly with Xero, QuickBooks, FreeAgent, and Sage, making it a natural fit for service businesses that invoice on retainer.
Note: GoCardless has announced an agreement to be acquired by Mollie, expected to close mid-2026, subject to regulatory approval.
Accounting Software
Accounting software does more than record transactions — for a UK sole trader, it handles invoicing, expense tracking, VAT returns, and increasingly, compliance with HMRC’s digital reporting requirements. Getting this right matters more than ever in 2026.
FreeAgent was built specifically for the UK self-employed market, and it shows. The interface is clean and jargon-free, Self Assessment estimates are calculated automatically as you work, and it handles the full MTD for Income Tax workflow without requiring manual intervention. For sole traders who bank with NatWest, Royal Bank of Scotland, Ulster Bank, or Mettle — and complete at least one transaction per month — FreeAgent is available at no cost, making it the strongest free accounting option in the UK.
Multi-currency support is included as standard on all plans, a feature that competitors gate behind premium tiers. Amazon UK Marketplace integration is available as an add-on (£6 + VAT/month), which is useful for sole traders selling through Amazon.
QuickBooks’ Sole Trader plan at £10/month + VAT is the most affordable paid route to full MTD for Income Tax compliance, and notably includes direct Self Assessment filing — something Xero does not offer at its entry price point. The mobile app is best-in-class for day-to-day expense tracking, with automatic mileage recording and receipt capture that works reliably without manual input.
For sole traders who need accounting software but cannot access FreeAgent for free, QuickBooks is the most natural starting point. The Simple Start plan (£14/month) adds invoice tracking and basic reporting for those who need more than the sole trader tier offers.
Xero is the most widely used accounting platform among UK accountants, and for growing businesses that work closely with an external accountant, operating on the same platform they use reduces friction and can lower your accountancy fees. Its integration ecosystem — over 1,000 connected apps — is unmatched, making it the strongest choice for businesses running Shopify, WooCommerce, or other e-commerce platforms that generate high transaction volumes.
The main consideration for sole traders is cost: the Ignite plan at £16/month is the minimum for MTD for Income Tax compliance, and it limits the number of invoices and bills. Self Assessment filing is not included in Xero — it is typically handled by your accountant. If you are a straightforward sole trader without complex reporting needs, FreeAgent or QuickBooks will serve you better at a lower price point.
Sage has a strong heritage in UK business accounting — millions of UK businesses have used Sage desktop software, and the cloud version carries much of that institutional familiarity. The key differentiator at the entry level is that unlimited payroll is included in all Sage plans from £12/month, where Xero charges separately and QuickBooks adds per-employee costs. If you have employees or are approaching the point of taking on staff, Sage’s all-in pricing can represent meaningful savings.
Sage is fully MTD-compliant for VAT and Income Tax, and its mobile app handles receipt capture and expense management well. It integrates with GoCardless, Stripe, and PayPal. For sole traders who used desktop Sage at a previous employer and want a familiar interface, the transition to Sage Business Cloud is the most natural one.
| Software | From | MTD ITSA | Self Assessment | Free option |
|---|---|---|---|---|
| FreeAgent | £19/mo | ✓ | ✓ | ✓ (with partner banks) |
| QuickBooks | £10/mo | ✓ | ✓ | ✗ |
| Xero | £16/mo | ✓ | ✗ | ✗ |
| Sage | £12/mo | ✓ | ✗ | ✗ |
Business Banking
Sole traders in the UK are not legally required to hold a separate business bank account — but the practical and professional arguments for doing so are compelling. A dedicated account simplifies Self Assessment, creates a clear audit trail, and signals to clients and suppliers that you run an organised operation.
All five accounts below are covered by the Financial Services Compensation Scheme (FSCS). The protection limit was raised from £85,000 to £120,000 per eligible person from 1 December 2025 — a change that applies to all authorised UK banks.
Revolut completed a four-year regulatory journey on 11 March 2026 when the Prudential Regulation Authority lifted all remaining restrictions on its UK banking licence, making Revolut Bank UK Ltd a fully authorised UK bank. For sole traders, this is a significant development: eligible deposits held with Revolut Bank UK Ltd are now covered by the FSCS up to £120,000 — the same protection you get at any high street bank.
Important for sole traders: because HMRC treats sole traders as a single legal entity, your personal and business Revolut deposits are combined for FSCS purposes, with the total protected up to £120,000. If you hold significant sums across both accounts, this is worth bearing in mind.
Revolut Pro is the dedicated sole trader tier — available free within your personal Revolut account. It provides a separate account number, its own debit card, cashback rewards on spending, and tax tools designed for self-employed income. For incorporated limited companies, Revolut Business plans start from £0/month with tiered feature sets.
Referral link. New customers may initially be onboarded to an e-money account (Revolut Ltd) before migration to Revolut Bank UK Ltd. FSCS protection applies to the bank entity only.
Starling Bank is a fully licensed UK bank and consistently ranks as the most customer-rated business bank in the UK, holding a 4.3 Trustpilot score from over 44,000 reviews — a level of satisfaction that is unusual in the banking sector. Its business account has no monthly fees, and most everyday transactions (UK transfers, direct debits, standing orders) are free. Starling offers a dedicated sole trader account alongside its standard business current account, making it straightforward to keep your self-employed income clearly separated from personal finances.
Tide is purpose-built for sole traders and small businesses, and its partnership with ClearBank means deposits are now FSCS protected up to £120,000. The free plan gives you a UK account number and sort code, built-in invoicing tools, and integrations with Sage, Xero, QuickBooks, and FreeAgent. A standout feature is the free instant saver account offering up to 4.0% AER (variable) — unusually competitive for a business banking product at no extra cost.
Monzo Business offers two tiers: the free Lite account covers core banking with no monthly fees, while Pro at £9/month adds the feature that most sole traders find genuinely transformative — Tax Pots. This tool automatically ring-fences a configurable percentage of each incoming payment as a tax provision, so by the time your Self Assessment bill arrives in January, the money is already set aside. For sole traders without an accountant actively managing their cash flow, this single feature can prevent a significant financial shock.
NatWest’s startup account is specifically designed for businesses trading for less than 12 months with annual turnover under £1 million, offering free day-to-day digital banking for 24 months — the longest introductory free period of any high street bank. Mettle, NatWest’s standalone business banking app, pairs this with a unique offer: FreeAgent accounting software is available free to Mettle customers who complete at least one transaction per month. For a sole trader who would otherwise pay £19/month for FreeAgent, that combination represents over £450 in annual savings.
Wise Business — best for businesses with international clients or suppliers
Wise is not a bank — it operates as an FCA-authorised electronic money institution and is not covered by the FSCS for standard account balances. Instead, customer funds are safeguarded: held in segregated accounts with top-tier institutions including Barclays and Citibank, and in secure liquid assets such as UK, US, and EU government bonds. This is a meaningfully different protection structure to FSCS, and sole traders should bear it in mind when deciding how much to hold with Wise.
Where Wise is unmatched is international payments: transfers to over 140 countries at the mid-market exchange rate with transparent, low fees, local account details in 22+ currencies, and the ability to receive payments from international clients as if you had a local bank account in that country. For any sole trader billing overseas clients regularly — freelance developers, consultants, designers, content creators — Wise Business eliminates the currency conversion costs that erode margins when receiving international income into a standard UK bank account.
Referral link. One-time £50 set-up fee for the Advanced plan (unlocks multi-currency receive, direct debits, and invoicing tools). Essential plan is free to open.
| Provider | Bank licence | FSCS protected | Limit | Notes |
|---|---|---|---|---|
| Revolut | ✓ (full, March 2026) | ✓ | £120,000 | Sole trader: personal + business combined |
| Starling | ✓ | ✓ | £120,000 | — |
| Tide | ✗ (EMI via ClearBank) | ✓ | £120,000 | Protection via ClearBank |
| Monzo | ✓ | ✓ | £120,000 | — |
| NatWest / Mettle | ✓ | ✓ | £120,000 | — |
| Wise | ✗ (EMI) | ✗ | Safeguarded | Not FSCS — funds safeguarded in segregated accounts |
Frequently asked questions
No — unlike limited companies, sole traders in the UK are not legally required to hold a separate business bank account. However, using a dedicated account makes bookkeeping significantly easier, simplifies your Self Assessment return, and looks more professional to clients. All five banking options in this guide offer free accounts suitable for sole traders.
Making Tax Digital for Income Tax (MTD ITSA) is HMRC’s requirement for sole traders and landlords to keep digital records and submit quarterly updates to HMRC using approved software — rather than a single annual Self Assessment return. From 6 April 2026, this is mandatory for those with gross income over £50,000/year. The threshold drops to £30,000 from April 2027. All four accounting packages in this guide are approved and compliant.
It depends on how you take payments. For in-person payments, SumUp’s 1.69% pay-as-you-go rate is the lowest flat rate. For online card payments, Stripe (1.5% + £0.20 for UK cards) and Square (1.4% + £0.25) are both competitive. For recurring billing and subscriptions, GoCardless (1% + 20p, capped at £2) is substantially cheaper than any card gateway. PayPal’s online standard rate of 2.9% + 30p is the most expensive option and is best used as a supplementary checkout option rather than a primary gateway.
Yes. Since 11 March 2026, Revolut Bank UK Ltd holds a full UK banking licence granted by the Prudential Regulation Authority (PRA). Eligible deposits are now covered by the FSCS up to £120,000 — the same protection offered by any high street bank. The previous concern about Revolut as an e-money institution (where funds were safeguarded but not government-guaranteed) no longer applies to deposits held with the UK bank entity. Note that crypto, stocks, and trading products remain in separate Revolut legal entities and are not FSCS covered.
No. Wise operates as an FCA-authorised electronic money institution, not a bank, which means standard account balances are not covered by the FSCS. Instead, Wise safeguards customer funds by holding them separately from its own operating capital — in segregated accounts with institutions including Barclays and Citibank, and in secure liquid assets such as government bonds. This provides meaningful protection, but it is not the same as government-backed FSCS compensation. Wise is best used for international payments and currency management rather than as a primary deposit account.
Yes — FreeAgent is available free to sole traders and business owners who hold a current account with NatWest, Royal Bank of Scotland, Ulster Bank, or Mettle (NatWest’s standalone business banking app), provided they complete at least one transaction per month. This is the most comprehensive free accounting option in the UK for sole traders, covering MTD for Income Tax, Self Assessment filing, invoicing, multi-currency, and payroll estimates at no cost.
Building your financial software stack
The most efficient setup for most UK sole traders in 2026 combines a free or low-cost payment gateway (Stripe for online, SumUp for in-person), free accounting via FreeAgent through Mettle or NatWest, and a modern business bank account — Revolut Pro if you value multi-currency and investing tools, Starling or Monzo if you want simplicity and strong customer service. Add Wise if you bill international clients regularly.
None of these tools require long contracts. You can start lean, switch as your needs change, and build a professional financial infrastructure that costs close to nothing until your revenue justifies investing more.
Gary Walsh is the Head of Tech Support at Software Supplies, with more than 20 years in the IT industry. Fully Microsoft-certified and experienced across the full business software stack — from Windows and Office to cloud infrastructure and device management — Gary delivers practical, no-nonsense advice that helps users and businesses get the most from their technology.
