- New customers, boost your business savings with up to 4.22% AER* variable
- Interest is paid monthly & no limits or fees on withdrawals
- FSCS Protected for eligible deposits up to £85,000
2 Products Compared
- Interest Rate:4.15% AER (Fixed)
- Minimum Deposit:£20,000
- Maximum Deposit:£2M
- Access Type:Fixed Rate
- Access Methods:App / Online
- FSCS Protected for eligible deposits up to £85,000
- Fixed rate guaranteed
- Apply online today
- Minimum Initial Deposit – £20,000
- Minimum Age 18 Years
- Available for registered companies based in the UK
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Interest Rate:4.15% AER (Fixed)
-
Minimum Deposit:£20,000
-
Maximum Deposit:£2M
-
Access Type:Fixed Rate
-
Access Methods:App / Online
- FSCS Protected for eligible deposits up to £85,000
- Fixed rate guaranteed
- Apply online today
- Minimum Initial Deposit – £20,000
- Minimum Age 18 Years
- Available for registered companies based in the UK
A Comparison of Fixed-Rate Business Savings Accounts in the UK
For businesses with surplus capital that is not required for immediate operational needs, a fixed-rate savings or bond account presents a prime opportunity to generate a predictable and often higher return. By locking your funds away for a predetermined period, you can secure an interest rate, bringing certainty to your financial planning and making your dormant cash work harder.
Understanding Fixed-Rate Business Savings Accounts
A fixed-rate business savings account is an agreement between your business and a financial institution where you deposit a lump sum for a set term. In return, the bank or building society provides a fixed interest rate for the entire duration of that term. This means the return on your savings is locked in and will not change, regardless of any fluctuations in the Bank of England Base Rate or wider economic conditions.
Typical Account Term Lengths
Financial providers offer a range of terms to suit different business saving goals. These typically start from as short as three or six months and extend to longer periods, commonly one, two, three, or even five years. The general principle is that the longer you are prepared to lock your money away, the more competitive the interest rate you will be offered.
Key Benefits of a Fixed-Rate Account
The primary advantage of a fixed-rate savings account is the certainty it provides. Knowing exactly how much interest your capital will accrue over the term makes financial forecasting more straightforward. These accounts also tend to offer some of the most attractive interest rates available for business savings, providing a higher return than more flexible options like easy-access or notice accounts. This can be particularly beneficial in a stable or falling interest rate environment, as your rate is protected.
Potential Drawbacks to Consider
The main trade-off for the higher, guaranteed return is the lack of access to your funds. During the fixed term, you are generally not permitted to make any withdrawals. In the rare instances where early access is allowed, it is usually subject to a penalty, such as the loss of a substantial amount of interest, which could negate the benefits of having opened the account. Businesses must be confident that they will not need to access the deposited funds before the term ends.
Important Factors for Comparison
When evaluating fixed-rate savings options, several key details must be scrutinised beyond the headline interest rate.
Interest Rates: AER vs. Gross Rate
It is important to compare accounts using the Annual Equivalent Rate (AER). The AER demonstrates what the interest rate would be if it were paid and compounded once a year, allowing for a fair comparison between different products. The gross rate is the interest rate before any tax is deducted.
Minimum and Maximum Deposit Amounts
Providers will specify the minimum deposit required to open a fixed-rate bond and a maximum amount that can be invested. These can vary significantly, so ensure the account is suitable for the sum your business intends to save. Corporate bonds designed for larger businesses often have much higher deposit limits.
The Application and Maturity Process
Opening an account typically requires you to provide details about your business, such as its legal status and registration number, along with identification for directors or owners. It is also important to understand what happens when the account matures. Most providers will contact you before the end of the term to outline your options, which usually include withdrawing the capital and interest, or reinvesting into a new product.
The Role of FSCS Protection
The Financial Services Compensation Scheme (FSCS) offers a vital safety net. For eligible limited companies, deposits of up to £85,000 are protected per UK-authorised financial institution. This protection means that if your chosen bank were to fail, your savings up to this limit would be secure. If your business wishes to deposit a sum larger than this, spreading it across multiple institutions is a prudent way to ensure all your capital is protected.
Fixed Rate Business Savings Account FAQs
1. Is the interest from a fixed-rate business savings account taxable?
Yes. For a limited company, interest earned is considered part of the company’s overall profit and is subject to Corporation Tax. For sole traders and partnerships, the interest earned is taxable as part of their individual income.
2. What happens if I need to access my money before the fixed term ends?
Most fixed-rate accounts do not permit any withdrawals before the end of the term. In circumstances where a provider might allow early access, it is almost always accompanied by a significant penalty. You should therefore consider these accounts as completely locking your money away for the duration of the term.
3. Will inflation affect the return on my fixed-rate savings?
Yes, inflation can impact the real value of your savings. If the rate of inflation is higher than the fixed interest rate you are receiving, the purchasing power of your money will decrease over time, even as its cash value grows. This is an important factor to consider when locking money away for longer terms.
4. Can I add more money to my fixed-rate account once it’s open?
No, usually a fixed-rate business savings account is designed for a single lump-sum deposit made at the time the account is opened. You cannot usually add more funds during the fixed term. If you have additional surplus cash, you would need to open a separate savings account.
5. What happens at the end of the fixed term?
Your provider will contact you before your account’s maturity date to explain your options. Typically, you can choose to have the principal sum and the accrued interest paid back into your business current account, or you can opt to reinvest the funds in a new fixed-term product, subject to the rates available at that time.