Deposit protection scheme limits rising from £85,000 to £120,000

What does this mean for individuals and businesses?

Effective from 1 December 2025, the Financial Services Compensation Scheme (FSCS) will be raising its deposit protection from £85,000 to £120,000. This covers individuals and businesses with deposits up to £120,000 in the event a UK-authorised bank, building society or credit union fails.

This increase will enable individuals and businesses to take advantage of the ever-growing list of providers with introductory interest rates and incentives. However, a key aspect of the FSCS is that it covers the bank and not the bank account. The £120,000 limit applies across all accounts held with one bank, so if you have more than £120,000 between current and savings accounts all held under the same provider, you are currently not covered in full by the deposit protection scheme.

The exception to this rule is if you have a joint account, you are entitled to £120,000 each so £240,000 in total protection. This does not apply to partnerships or companies, however, which are treated as one entity under current rules.

Temporary High Balance Protection (THBP)

For individuals, you can also benefit from THBP, which will cover £1m, rising to £1.4m as of 1 December 2025.

This protection is specifically given due to a qualifying life event. This would include things such as the sale of your main residence; benefits paid on retirement or a large redundancy payment. Note that the terms and conditions specifically state that it does not cover proceeds from the sale of second homes or buy-to-let properties.

You can find a full list of qualifying events on the FSCS website here.

At Lovewell Blake Financial Planning, they offer access to Insignis Cash Management Hub, a powerful platform designed for both personal clients and UK SMEs to maximise returns on excess funds – securely and efficiently.