If you do business with customers or suppliers outside the UK then you will very likely need an IBAN and BIC to send or receive payments to and from overseas. As part of the process of setting up your new business in the UK you will need to open a business bank account. Your bank will provide you with your IBAN and any other details, such as your BIC / SWIFT code. In this article we will explain what is meant by an IBAN and a BIC, why you might need an IBAN, which countries use IBANs, how to find your IBAN and further information that is most useful if you trade with customers and suppliers internationally.
What is an IBAN?
An “International Bank Account Number” (IBAN) is a bank account number that uses a standard globally recognised format. IBANs enable banks to make payments to and receive payments from bank accounts in other countries. Using IBANs means that banks can be sure that money is transferred to and from the correct bank account. It is important to note that not all countries use IBANs. The IBAN standard is currently recognised in 79 countries around the world (see below for a complete list).
IBANs were first developed as a way to simplify the transfer of money to recipients in other countries. In some countries IBANs are used also for internal (i.e. domestic) money transfers. The information contained within an IBAN ensures that transaction errors, rejected payments and transfer delays are reduced or eliminated.
What are the benefits of an IBAN?
Compared with other methods of transferring money, an IBAN offers several benefits for businesses that make overseas transactions – as follows:
- Ensures accurate bank account identification
- Reduces the risk of losing funds during international transfers
- Facilitates faster processing by streamlining cross-border payments and eliminating the need for manual intervention
- Promotes greater transparency and compliance with anti-money laundering regulations
- Provides enhanced security and the legitimacy of international financial transactions, and
- Widely recognised and adopted across a great many countries (see below for a full list of countries in which IBANs are used). IBANs are therefore almost universally accepted and constitute an efficient system for seamless global money transfers.
What information is contained within an IBAN?
An IBAN contains more than just a bank account number and a sort code. It also identifies your bank, the country in which the bank is located and other important details.
An IBAN is comprised of up to 34 letters and numbers in a standard format. IBANs in the UK each have 22 digits and contain the following information:
- Country Code (2 characters)
- Check digits (2 numbers) – these allow banks to check that the IBAN provided is correct
- Bank Code (4 characters)
- Sort Code (6 numbers)
- Bank Account Number (8 numbers).
What does an IBAN look like?
Here is an example of an IBAN in the UK:
GB 13 BUKB 601613 31926819
- Country Code = GB
- Check digits = 13
- Bank Code = BUKB (for Barclays Bank UK)
- Sort Code = 60-16-13
- Bank Account Number = 31926819
Examples of other UK bank codes include:
- ABBY for Santander Bank
- LOYD for Lloyds Bank
- HBUK for HSBC UK
- NWBK for Natwest Bank UK
What is a BIC?
In addition to your IBAN you will need also a BIC, or “Bank Identifier Code”, to make or receive international payments correctly. BICs are known also as SWIFT codes. SWIFT refers to the Society for Worldwide Interbank Financial Telecommunication, a global network that processes payments between different countries. BICs are used to identify the bank to which money is to be transferred, rather like an address. Each bank has its own BIC and, in some cases, they may have more than one.
Although the terms BIC and SWIFT are often used interchangeably, they actually refer to different aspects of the international banking system. A BIC is an identification code which is assigned to a particular financial institution, whereas SWIFT is the system through which financial institutions communicate and conduct transactions securely. In other words, the BIC is part of the SWIFT messaging system and it helps to ensure the accurate routing of funds during international transactions.
What information is contained within a BIC?
A BIC is made up of between 8 and 11 numbers and letters which are split into 3 or 4 parts:
- Bank code
- Country code
- Location code
- Branch code
For example, the BIC or SWIFT code BUKB GB 21 03M refers to a branch of Barclays Bank within Great Britain at location 21 and with a branch code of 03M (Preston).
If the bank is not a branch then the last 3 digits will not be used. For example, the BIC code for Barclays Bank’s head office is simply BUKB GB 22.
When must I use an IBAN / BIC?
As a business owner you may need to use an IBAN and BIC when making or receiving international transactions to or from bank accounts in countries where these standards have been adopted.
To make an international payment (e.g. to a supplier) you must provide the recipient’s IBAN and BIC to ensure the efficient and successful transfer of funds. Many banks and financial institutions will require this information for cross-border transactions. Failing to provide full and correct details could result in the payment being delayed or even, potentially, rejected.
You may need also to provide your IBAN and BIC to your overseas customers to allow them, likewise, to make payments to your UK bank account.
Where can I find my IBAN / BIC?
Your bank can provide your IBAN and BIC. These may even have been provided to you when you first opened your account. Alternatively, you should be able to find your IBAN and BIC on your bank statements or through your online bank portal. If you still cannot find your IBAN and BIC, speak to your bank.
Opening a business bank account
Although there is no legal requirement to open a business bank account as a limited company, doing so is strongly recommended. Opening such a business bank account will allow you to separate your private financial matters from those of your business. Any money that you receive from customers and pay to suppliers and HMRC will be kept entirely separate from your personal bank account. For this reason it is important to open a business bank account from the outset of your new venture.
In which countries are IBANs used?
IBANs are used in the following countries:
|Bosnia and Herzegovina
|Sao Tome and Principe
|Holy See (the)
|United Arab Emirates
|Virgin Islands British
As we have discussed in this article, IBANs are a standardised international system for identifying bank accounts. The use of IBANs ensures that funds transferred between different countries always reach the correct destination. IBANs are used widely in Europe and in a great many other countries, simplifying international payments and reducing delays in processing. IBANs have therefore become an indispensable tool in the modern global banking landscape, fostering seamless and efficient international money movements and transparency while also ensuring compliance with anti-money laundering regulations.
Uniwide Formations fast track UK business bank account service
To make opening a bank as easy as possible for UK residents, alongside your limited company formation we offer also a fast-track bank account referral service. Through our system you can open an account with:
- Counting Up and
You can open an account using our service by completing 3 simple steps:
- Complete your online application to register your company
- Select the bank (or banks) with whom you would like to open an account
- Your chosen bank will then contact you directly to arrange a phone or face-to-face meeting to open your account.
Uniwide Formations specialises in UK company formation. We offer a range of company formation packages to suit the needs of your new business venture. We also make opening a new bank account as easy as possible. Through our business bank account service we can introduce you to a range of top UK banks and payment partners. Our friendly and expert team will provide you with support, advice, resources and tools to make your business journey as smooth as possible.