If you run a small business in the UK, you’ve probably wondered whether you should get a business credit card or just stick with your personal one. The answer isn’t always straightforward, especially for sole traders and freelancers who blur the lines between personal and business spending.
The most important thing to know upfront is that business credit cards aren’t available to everyone. You’ll need a registered limited company or LLP to qualify. If you’re a sole trader, you’re stuck using personal credit cards for business expenses regardless of how much you’d like the benefits of a business card. That said, you can still claim tax relief on legitimate business purchases made with a personal card, you just can’t deduct the annual fees or interest charges.
The big advantage of business cards for those who qualify comes down to tax. Annual fees on business cards are tax deductible, which can make a meaningful difference. Take the American Express Business Gold card with its £195 annual fee. If you’re in the 20% tax bracket, that fee only costs you £156 after tax relief. The same logic applies to any interest charges you end up paying on business purchases, though obviously you’d prefer to pay your balance in full and avoid interest altogether.
Beyond tax benefits, business cards shine when you need to separate your finances properly. They typically don’t report to your personal credit file, which means high business spending won’t affect your credit score or reduce your borrowing capacity for things like mortgages. You’re also getting access to employee cards, expense tracking tools, and often higher credit limits than personal cards offer. For someone running a limited company with £5,000 in monthly expenses, these features make a real difference.
Personal cards have their own advantages though. They’re easier to get approved for, offer better consumer protection under Section 75, and come with more variety. You’ll find dozens of personal card options compared to a handful of business ones. The application process is simpler too, without needing to provide company documents and financial statements.
The spending threshold matters quite a bit when deciding. Most of the worthwhile business cashback cards require you to spend at least £2,000 per month to earn their top rates. Below that, you’d actually earn more with a simple personal card. Capital on Tap Business is one exception, offering 1% cashback with no minimum spend requirement.
In practice, many business owners end up using both. They’ll put company expenses on a business card to maximize tax relief and keep clean records, while using a personal card for personal spending and perhaps a travel-specific card for trips abroad. It’s not complicated once you establish the habit, and your accountant will thank you for the clear separation come tax time.
The bottom line is this: if you have a limited company and spend over £2,000 monthly on business expenses, a business card probably makes sense. If you’re a sole trader or spending less than that, stick with a personal card and keep good records of what’s business-related. Either way, just make sure you’re paying off the balance in full each month, because no reward or tax benefit is worth paying 20%+ interest.