Bank & Finance Charges — United Kingdom Tax Rules

Claim business bank account fees, interest on business loans, and payment processing charges.

Claimable: Fully claimable · Tax authority: HMRC

HMRC Rules

• Business bank account fees and monthly charges are fully deductible.
• Interest on business loans, overdrafts, and business credit cards is claimable.
• Payment processing fees — Stripe, PayPal, SumUp, iZettle/Zettle, and card terminal charges — are deductible.
• Currency exchange fees on business transactions are claimable.
• Personal bank charges or interest on personal borrowing (even if used partly for business) is NOT deductible — keep business banking separate.
• Late payment charges imposed by suppliers are deductible as a business cost.

Limits

No cap — must be incurred for business banking or financing purposes. Keep personal and business accounts clearly separate.

Worked Example

Mike's business bank account charges £10/month (Starling Business = free; some banks charge). He pays £150/year in Stripe processing fees (2.9% + 30p per transaction), £80 in loan interest on a small business loan, and £40 in foreign currency fees on EU client invoices. Total claim: (£10 × 12) + £150 + £80 + £40 = £390.

Record Keeping

• Keep bank statements showing all fees and charges
• Download payment processor statements (Stripe dashboard, PayPal reports)
• Retain loan agreements showing interest terms and payment schedules
• Separate business and personal banking clearly in your records
• Record any currency conversion fees with the underlying transaction they relate to

Frequently Asked Questions

Can I claim charges on a personal account used for business?

Only the proportion of charges attributable to business transactions — and even then, it is difficult to evidence. HMRC expects self-employed people to keep separate business accounts. Using a personal account for business makes record-keeping harder and may lead HMRC to question your expense claims.

Are PayPal and Stripe fees deductible?

Yes. Payment processing fees charged by PayPal, Stripe, SumUp, Square, iZettle/Zettle, GoCardless, or any card terminal provider are fully deductible business costs. Keep your monthly processor statements as evidence.

Can I claim interest on a loan used to buy business equipment?

Yes. Interest on loans taken out for business purposes is fully deductible. The capital repayment (the principal borrowed) is not deductible, but the interest element is. Keep the loan agreement showing the interest rate and payment schedule.

What if I use a business credit card — are the fees and interest deductible?

Yes. Annual credit card fees and interest charges on a business credit card are deductible when the card is used for business spending. Personal credit card interest is not deductible even if the card is occasionally used for business — keep cards separate.