UK bank & savings protection

Deposit limit protection increase

From 1 December 2025 the Financial Services Compensation Scheme (FSCS) deposit protection limit will rise to £120,000. This means that if you hold deposits or savings with a UK-authorised bank, building society or credit union and it goes out of business, FSCS will compensate you up to the new limit of £120,000 per eligible person, per authorised firm.

The FSCS also covers temporary high balances, which will also rise from December, of up to £1.4 million. These may occur from major life events, such as selling a home or receiving an inheritance. Temporary high balances are protected for up to six months.

There are some details to be aware of:

• The additional compensation limit is per person, per qualifying life event. For joint accounts with a temporary high balance, each named person benefits from FSCS protection of up to £1.4m.
• The protection begins on the date the money becomes legally transferable to you, or from when it is first credited to your account (or to a solicitor’s client account for onward payment to you). You can move the funds to another account in your name and maintain the protection, but the six-month period would not begin again.
• Proceeds from the sale of second homes or buy-to-let properties are not covered. If your temporary high balance exists because of a real estate transaction, it must relate to your main residence for FSCS protection to apply.
• Compensation is unlimited for temporary high balances that relate to personal injury, disability or incapacity claims.
• FSCS will pay compensation when certain requirements set out by the UK’s financial regulators are met.

Qualifying life events and evidence required

A range of life events could create a temporary high balance in your bank account, including:

• Real estate transactions (property purchase, sale proceeds, equity release – this doesn’t have to be a UK property but must relate to your main residence).
• Benefits payable under an insurance policy.
• Personal injury compensation.
• Disability or incapacity (state benefits).
• Claim for compensation for wrongful conviction.
• Claim for compensation for unfair dismissal.
• Redundancy (voluntary or compulsory).
• Marriage or civil partnership.
• Divorce or dissolution of a civil partnership.
• Benefits payable on retirement.
• Benefits payable on death.
• A claim for compensation in respect of a person’s death.
• Inheritance.
• Proceeds of a deceased’s estate held by a personal representative.

To verify the source of funds for a temporary high balance, the FSCS may ask for evidence which could include (but not be limited to) the following: 

• A property sale receipt or agreement.
• A court judgement.
• A will.
• A letter from an insurer regarding an insurance payout.
• A letter from a lawyer, conveyancer, mortgage provider, former employer, or pension trustees.
• Court orders.
•  Social security statements.
• Probate / letters of administration.
• Death / marriage certificate.
• Land registry and HMRC records.

This list isn’t exhaustive, and the evidence needed will depend on your individual circumstances. If you provide the relevant supporting evidence and your claim is eligible under FSCS rules, compensation is payable within three months.

Why are the limits being increased now?   

The previous protection limit was established in 2017, when the UK was a member of the EU. Following Brexit, regulatory control has returned to the UK, whilst inflation since 2017 has reduced the real value of the original limit. As a result, the FSCS has increased the protection level to ensure it remains equivalent in value to that provided in 2017.

While this increase is welcome, maintaining substantial cash balances in a bank account is generally not advisable over the medium to long term. We would be pleased to advise you on tax-efficient investment options for any surplus deposits you may hold.