Bank deposit limits are rising : What does this mean for you?

From 1 December 2025, the Financial Services Compensation Scheme (FSCS) deposit protection limit will increase from £85,000 to £120,000 per eligible depositor, per UK-authorised bank, building society, or credit union. Temporary high balance protection will also increase significantly, from £1 million to £1.4 million, offering broader coverage for major life events or business transactions.

Below, we’ve broken down the changes in a clear Q&A format to help individuals and businesses understand what the new rules mean in practice.

What exactly is changing?

The key change is the increase in the standard FSCS protection limit to £120,000. This applies to each eligible depositor at each authorised institution. Importantly, “institution” refers to a banking licence, not a brand name so two brands under the same licence count as one for protection purposes. The higher temporary high balance limit will offer six months of enhanced protection following life events such as property sales, inheritance, or insurance payouts.

This shift brings the UK’s depositor protection more in line with current financial realities and aims to strengthen confidence in the banking system.

Why is the limit increasing?

The FSCS limit has not changed since 2017 despite inflation, shifting economic conditions, and the broader rise in personal and business cash holdings. Increasing the limit helps ensure that deposit protection remains meaningful and reduces the risk of loss if a financial institution fails.

This update is also intended to support financial stability by increasing public confidence, particularly as larger cash holdings have become more common in periods of slower investment activity or while individuals and businesses await major transactions.

How does this impact individuals and private clients?

For individuals, the rise to £120,000 provides stronger protection for everyday savings as well as for those temporarily holding larger amounts, for example, following the sale of a property, receipt of inheritance funds, or before reinvesting assets. Joint accounts will continue to benefit from double the individual limit, meaning joint savings will be protected up to £240,000 per authorised institution.

Private clients with wider wealth structures—such as trusts, investment holding accounts, or multiple personal accounts across different brands should be aware that many retail and private banking brands operate under shared licences. Without reviewing these structures, individuals may unintentionally exceed the new protection limit.

Understanding where your accounts sit within banking groups is essential, as appearances can be misleading; two very different brands may operate under one licence, while others may fall under separate licences even when part of the same group.

What does this mean for businesses and SMEs?

Businesses often maintain higher operational and strategic cash balances, so the increase to £120,000 per authorised institution will provide improved coverage for companies of all sizes. However, it is still relatively easy for active businesses especially those in growth phases or handling project funds to exceed this threshold without realising it.

SMEs should review how day-to-day reserves, VAT set-aside funds, payroll cash, and project-based capital are distributed across accounts. For larger businesses, the broader cash management strategy becomes even more important, as treasury policies may need revisiting to ensure deposits are appropriately spread and risk is minimised.

A particular watch-out: group companies

In a group structure, each separate legal entity is treated as an individual depositor. This means that subsidiaries can each have up to £120,000 protected at the same authorised institution. While this can offer meaningful additional protection across the group, it also creates complexity: if several companies in the group bank with the same institution, the group’s overall exposure may still exceed practical comfort levels.

Additionally, directors should ensure banking arrangements are aligned with the group’s internal transactions, cash sweeps, and treasury policies. Automatic cash pooling, for example, may inadvertently consolidate funds in a way that reduces or eliminates FSCS protection.

Do I need to make changes now?

You may not need to make immediate changes, but this is an ideal time to review your structure. Consider the total amount you hold in each banking group, whether deposits are concentrated under a single licence, and whether temporary high balance protection could apply for short-term events.

Both individuals and businesses should ensure that accounts assumed to be “separate” are not actually linked under one licence. In many cases, a simple reshuffle or opening an additional account can materially improve protection without changing your wider financial strategy.

How can I ensure my deposits are fully protected?

A simple review can offer clarity. Look at:

• Which banks you hold funds with—and whether they share a single banking licence
• The size of balances across personal, joint, and business accounts
• How group companies’ deposits are distributed
• Whether larger incoming funds will temporarily qualify for the enhanced limit
• Whether you would benefit from spreading deposits or restructuring accounts

Ensuring funds are positioned correctly can protect significant value and reduce risk in the event of an unexpected financial institution failure.

Want clarity?

Are your deposits fully protected under the new £120,000 limit—and are your personal, business, or group arrangements optimised? If you’re unsure, we can help you review your position, map your accounts across banking licences, and ensure you’re maximising protection.

If you want support, please get in touch on 01932830664 or email us enquiries@wardwilliams.co.uk