The Financial Services Compensation Scheme (FSCS) is a UK government-backed body that protects customers’ money in the event of a bank or building society failure.
If an authorised institution fails, the FSCS will usually refund eligible deposits automatically within seven working days, provided the bank or building society is authorised by the Prudential Regulation Authority (PRA) and regulated by the Financial Conduct Authority (FCA).
The deposit protection limit increased from £85,000 to £120,000 from 1st December 2025, the first increase since 2017.
In this guide, we examine how the FSCS protects the money in your business bank accounts.
How does it protect individuals?
The FSCS protects deposits up to £120,000 per person, per authorised institution (banking group).
If your bank or building society fails, you can claim up to £120,000 of your eligible deposits back. For joint accounts, protection is usually up to £240,000 in total.
For example, if you had £125,000 in a savings account with a single authorised institution, only £120,000 is protected. The remaining £5,000 would not be covered if the bank were unable to repay its debts.
Investment protection: FSCS protection for investment business is up to £120,000 per person, per firm, depending on the circumstances. This limit replaced the older £50,000 cap.
The level of protection depends on the type of business you own
FSCS protection does apply to business bank accounts, subject to eligibility.
If your business account is with a UK-authorised bank or building society and the bank goes under, you can claim back up to £120,000 of your eligible deposits.
However, the £120,000 limit applies to a single legal entity within a single authorised institution:
- Sole traders: a sole trader and their business are legally one person. If you hold a personal account and a business account at the same authorised institution, you have a single £120,000 pot across both.
- Limited companies and LLPs: a company or LLP is a separate legal entity. The company’s £120,000 protection is separate from any director’s or shareholder’s personal protection, even if accounts are with the same bank.
- Partnerships: where a joint account is held as a business partnership, the partnership is generally entitled to a single £120,000 claim rather than one per partner.
Example: if Jane runs a café as a sole trader and keeps £70,000 in her business account and £60,000 in personal savings with the same bank, she is covered for a total of £120,000. If the café is incorporated as a limited company, the company’s £70,000 is protected separately from her £60,000 personal funds, giving full protection in this example.
Note: protection is per authorised institution, not per brand. Some brands share a single banking licence, so your £85,000 limit can be shared across them. Check the bank’s licence details before spreading balances.
Accounts and providers that are not covered
FSCS deposit protection only applies to money held with firms authorised to accept deposits. It does not cover:
- Accounts with firms that are not authorised to accept deposits in the UK
- Funds held with e-money institutions under safeguarding rules rather than a banking licence
- Overseas banks without UK deposit-taking authorisation
- Money held with investment or insurance companies that is not a protected deposit
Some newer business account providers operate under e-money licences rather than full banking licences.
In these cases, funds must be safeguarded in segregated accounts, but they are not protected by FSCS. Always check the provider’s regulatory status before opening an account.
Temporary high balances
Temporary high balances of up to £1.4 million (increased from £1 million from 1st December 2025) are protected for six months in certain circumstances, such as receiving the proceeds from selling a home or business, an insurance payout, a redundancy payment or an inheritance.
These claims often require additional information and can take longer than standard deposit claims.
Additional points to be aware of
- FSCS pays compensation once the authorities declare a firm in default. Standard deposit claims are usually paid within seven working days. Complex cases can take longer.
- Protection is not per account. It is per eligible person or legal entity, per authorised institution.
- If you hold significant balances, consider spreading funds across multiple authorised institutions to stay within the limits.
- You can look for the “FSCS Protected” badge or check a firm on the FCA Financial Services Register to confirm status.
If you are unsure whether your business bank account is protected by the FSCS, read the official guidance and FAQs on the FSCS website. You can also contact their helpline on 0800 678 1100.