Bank charges & account fees

Bank charges, account fees and overdraft interest on a business bank account are allowable running costs. The charges must relate to the business account — purely personal banking costs are not deductible.

Sole traderAllowable

Ltd companyAllowable

EmployeeNot allowable

Conditions

Bank charges, overdraft charges and account maintenance fees on a dedicated business bank account are allowable. GOV.UK's self-employed expenses guidance lists 'bank, overdraft and credit card charges' as an allowable financial cost (updated November 2024). The GOV.UK cash basis guidance also confirms that 'interest and bank charges, for example interest on bank overdrafts' are allowable under cash basis accounting.
The charges must be genuinely incurred for business banking. If you use a single personal account for both business and personal transactions, only the proportion of charges attributable to business activity is deductible. Opening a dedicated business account makes the claim straightforward and avoids the need for apportionment.
For a limited company, bank charges on the company's accounts are an allowable deduction for corporation tax. Where a director uses a personal account to receive company income, the position is more complex — a dedicated company account is strongly preferable.
Employees do not usually operate business bank accounts and cannot claim personal account charges as a tax deduction.

Common mistakes

Claiming fees from a personal bank account used for mixed spending without restricting to the business proportion.
Claiming the repayment of a loan or overdraft principal as a bank charge — only the interest and account fees are allowable, not repayments of borrowed capital.
Overlooking smaller recurring fees such as monthly account maintenance charges, CHAPS transfer fees, and card payment terminal fees — these all count and add up over a year.

What to keep

Bank statements showing charges and overdraft interest.
If a single account is used for business and personal transactions, a note explaining the basis for the business proportion claimed.

Real-world example

A sole trader has a dedicated business current account. During the year she pays £180 in monthly account fees, £35 in CHAPS transfer fees, and £90 in overdraft interest during a short cash-flow gap. All £305 is allowable in full as a business financial cost, since the account is used entirely for the business.

Frequently asked

Can I claim the fees on my personal account if I use it for business?

Only the business proportion. Using a personal account for mixed spending means you need to apportion any charge between business and personal use, which requires records showing how much of the account activity was business-related. A dedicated business account is simpler and makes the claim straightforward.

Are merchant service fees and card payment terminal fees deductible?

Yes. Fees charged by a payment processor — such as a percentage of each card transaction — and any terminal rental are a cost of accepting customer payments and are allowable in the same way as other bank charges.

Not sure how this applies to you?

The rules shift with your circumstances. A qualified accountant can confirm what you can claim and handle it for you.

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Related allowances

Source: HMRC guidance · Last checked 2026-06-18

This page is general information based on HMRC published guidance, not tax advice. Status shown is a plain-English summary — your own position can differ. Always check the HMRC source above and speak to a qualified accountant before making a claim.