How to Delete a Bank Account in Xero

At Towerstone Accountants we provide specialist limited company accountancy services for directors and owner managed businesses across the UK. We created this webpage for business owners who want practical guidance on choosing and using accounting software, including day to day bookkeeping tasks, invoicing, bank feeds, and reporting. Our aim is to help you keep accurate records, reduce admin time, and stay compliant with HMRC and Companies House requirements.

Deleting a bank account in Xero is one of those tasks that sounds straightforward, but in practice it often causes hesitation. I regularly see business owners and finance teams worry about doing the wrong thing, breaking reconciliations, or losing historical data. Those concerns are valid, because Xero is designed to protect accounting records, and for good reason. You cannot simply delete a bank account in all circumstances, and in many cases deleting is not actually the best or correct option.

In this guide I am going to walk you through exactly how bank accounts work in Xero, when you can delete a bank account, when you cannot, what Xero allows instead, and how to deal with common real world scenarios such as closed bank accounts, duplicate feeds, and mistakes made during setup. Everything here is based on practical use of Xero in UK businesses, and written to help you avoid errors that can cause problems later with accounts, VAT returns, or HMRC.

Understanding what a bank account means in Xero

Before looking at deletion, it is important to understand what a bank account represents inside Xero. A bank account in Xero is not just a feed of transactions. It is a core part of the accounting system and links directly to the general ledger.

In Xero, a bank account:

• Represents a balance sheet account
• Holds reconciled and unreconciled transactions
• May be linked to a live bank feed
• Is used to process payments and receipts
• Forms part of historical accounting records

Because of this, Xero is deliberately cautious about allowing bank accounts to be removed once they contain data.

Why you often cannot delete a bank account

In many cases, users discover that the delete option is greyed out or missing. This usually happens because the bank account has activity attached to it.

You cannot delete a bank account in Xero if:

• It has any reconciled transactions
• It has unreconciled transactions
• It has a non zero balance
• It has been used in reports
• It is linked to historical accounting periods

This is not Xero being awkward. It is Xero protecting the integrity of your accounts.

Deleting a bank account that has already been used would remove part of the accounting trail, which would cause problems with:

• Trial balances
• VAT returns
• Year end accounts
• Audit trails
• HMRC compliance

Because of this, deletion is only possible in very limited situations.

When you can delete a bank account in Xero

There are only a few scenarios where Xero will allow a bank account to be deleted.

You can usually delete a bank account if:

• It was added in error
• It has never been used
• It has no transactions at all
• It has a zero balance
• No payments or receipts are linked to it

This often happens where someone adds the wrong bank during setup or duplicates an account accidentally.

How to check whether a bank account can be deleted

Before attempting deletion, you should always check the account status.

To do this:

• Go to the Accounting menu
• Select Bank accounts
• Locate the account you want to remove
• Check whether there are any transactions
• Check whether there is a balance showing

If there is any activity at all, deletion will not be available.

How to delete a bank account that has never been used

If the bank account truly has no transactions and no balance, deletion is straightforward.

The steps are:

• Go to Accounting
• Select Bank accounts
• Find the relevant bank account
• Click the bank account name
• Choose Edit account details
• Scroll to the bottom
• Select Delete

Xero will usually warn you before deletion. If the delete option is available, it means the account meets the criteria.

Once deleted, the bank account is permanently removed from the organisation.

What happens when you delete a bank account

When a bank account is deleted:

• The bank account is removed from the chart of accounts
• It no longer appears on the dashboard
• Any unused setup is removed

Because deletion is only allowed when there is no activity, no accounting data is lost.

Why deletion is rarely the right option

In practice, deleting a bank account is much less common than people expect. Most of the time, the correct approach is not deletion, but archiving.

This is because most real world scenarios involve bank accounts that were used at some point, even briefly.

Common examples include:

• A bank account that has been closed
• A temporary loan account
• A bank feed that was replaced
• An old account from a previous year

In all of these cases, archiving is the correct solution.

What archiving a bank account means in Xero

Archiving a bank account removes it from day to day use without deleting historical data.

When you archive a bank account:

• All historical transactions are preserved
• Reports remain correct
• The account is removed from the dashboard
• No new transactions can be posted to it

This is usually exactly what you want.

How to archive a bank account in Xero

Archiving is the most common and safest way to deal with old or closed bank accounts.

The steps are:

• Go to Accounting
• Select Bank accounts
• Click on the bank account
• Choose Edit account details
• Select Archive

Xero will confirm the action before completing it.

Once archived, the account disappears from the main dashboard but remains available in reports.

When you should archive instead of delete

You should archive a bank account if:

• The account has been used
• The account was previously reconciled
• The bank account has been closed
• The bank feed is no longer active
• The account relates to a prior year

Archiving keeps your accounting records intact and avoids problems later.

What happens to historical transactions when you archive

All historical data remains exactly as it was.

This includes:

• Reconciled transactions
• Attachments
• VAT treatment
• Payment links
• Audit trail

Archiving does not change figures in any report.

Common scenario: closing a real world bank account

This is one of the most common reasons people want to delete a bank account.

If you close a bank account in real life:

• You do not delete it in Xero
• You reconcile it to zero
• You archive it

Before archiving, you should ensure:

• All transactions are reconciled
• The closing balance matches the bank statement
• No unreconciled items remain

This ensures the accounts are clean.

Common scenario: duplicate bank accounts

Duplicate bank accounts often happen when:

• A bank feed is reconnected
• Someone sets up the same account twice
• A manual account is created alongside a feed

In this case, you need to decide which account is correct.

If one account has no transactions:

• Delete the unused one

If both accounts have transactions:

• Move transactions if possible
• Reconcile correctly
• Archive the incorrect account

Never delete an account that has real data unless you are certain it was entirely incorrect.

How to deal with a wrong bank feed

If a bank feed is linked to the wrong bank account:

• Disconnect the feed
• Do not delete the bank account
• Reconnect the feed correctly

Deleting the account is rarely the solution and often causes more problems.

What if the delete option is not available

If you cannot see the delete option, it means one of the following applies:

• There are transactions on the account
• The account has a balance
• The account has been used historically

In these cases, archiving is the only correct option.

Can you ever fully remove historical bank accounts

In accounting terms, no. Once a bank account has been used, it becomes part of the company’s accounting history.

Removing it would:

• Break the audit trail
• Change historical balances
• Affect VAT returns
• Affect filed accounts

Xero is designed to prevent this.

Bank accounts and VAT returns

This is particularly important for UK users.

Bank transactions often feed into VAT returns. Deleting or altering accounts incorrectly can:

• Change VAT calculations
• Cause differences between filed and current figures
• Trigger issues during HMRC checks

Archiving avoids these risks.

What to do before deleting or archiving

Before making any change, I always recommend:

• Checking the bank balance is correct
• Reviewing unreconciled transactions
• Ensuring no payments are pending
• Confirming no future dated transactions exist

Taking five minutes to check this avoids hours of fixing later.

Permissions and user access

You can only delete or archive bank accounts if you have sufficient permissions.

You usually need to be:

• An adviser
• A standard user with appropriate rights

If you cannot see edit options, check user permissions.

What if you made a mistake

If you delete an unused bank account by mistake, you can simply recreate it.

If you archive a bank account by mistake:

• You can unarchive it
• Go to Chart of accounts
• Find archived accounts
• Restore the account

Xero allows archived accounts to be reinstated easily.

Why Xero protects bank accounts so strongly

From a professional perspective, this is one of Xero’s strengths.

Bank accounts are central to:

• Financial accuracy
• Compliance
• Audit trails
• Trust in reports

Allowing easy deletion would undermine that.

Best practice for managing bank accounts in Xero

To avoid issues in future:

• Name bank accounts clearly
• Avoid creating duplicates
• Reconcile regularly
• Archive promptly when accounts are closed
• Review bank accounts at year end

Good housekeeping reduces confusion and keeps accounts clean.

What accountants usually recommend

In practice, most accountants recommend:

• Delete only accounts that were never used
• Archive everything else
• Never force changes to historical data

This approach keeps Xero aligned with real world accounting requirements.

Common mistakes I see

The most frequent problems include:

• Trying to delete an account that has transactions
• Leaving closed accounts unreconciled
• Creating duplicate accounts unnecessarily
• Disconnecting feeds incorrectly
• Making changes without understanding the impact

Almost all of these are avoidable.

Should you speak to your accountant first

If the bank account:

• Has been used in a closed year
• Is linked to VAT returns
• Appears in filed accounts

you should speak to your accountant before making changes. A quick check can prevent serious issues.

Final thoughts

Deleting a bank account in Xero is only possible in very limited situations, usually where the account was added in error and never used. In most real world cases, archiving is the correct and safest approach.

Xero is designed to preserve accounting integrity, not to make removal easy, and that is a good thing. Understanding when to delete, when to archive, and when to leave things alone will help you keep clean records, avoid VAT and compliance problems, and make year end reporting far smoother.

If you treat bank accounts in Xero as part of your permanent accounting history rather than disposable setup items, you will almost always make the right decision.

You may also find our guidance on how to manage users on xero and how to reconcile in xero helpful when exploring related accounting software tasks. For a broader overview of software options and setup guidance, you can visit our accounting software hub.