Business deposit protection: how the £120,000 FSCS limit applies

The current FSCS deposit limit is £120,000 per eligible person or entity, per authorised firm. The difficult part for businesses is not the number itself. It is identifying which legal entity owns the money and whether several bank brands share the same banking licence.

Start with the current £120,000 deposit-protection limit

FSCS states that the deposit-protection limit increased from £85,000 to £120,000 on 1 December 2025. If a UK-authorised bank, building society or credit union fails, eligible depositors can normally be compensated up to £120,000 per eligible person or entity, per authorised firm.

The limit applies across relevant current and savings accounts with the same authorised firm, not separately to each account. A company with £70,000 in its current account and £80,000 in savings at the same authorised bank has £150,000 of deposits against one £120,000 limit, subject to eligibility and the exact firm structure.

A limited company or LLP can have protection separate from its owners

FSCS says that where the business is a separate legal entity, such as a limited company or LLP, eligible business deposits can be protected up to £120,000 in the business's own right. An owner can separately have personal protection up to the limit for eligible deposits held personally with the same failed bank.

This distinction is important for owner-managed companies. If a director has £90,000 personally and their limited company has £110,000 with the same authorised bank, the company and the individual are separate eligible depositors rather than one combined £200,000 balance, assuming all deposits meet the FSCS rules.

A sole trader's business and personal deposits are generally combined

FSCS says a sole trader is not treated as a separate legal entity for this purpose. Business and personal accounts held by the same sole trader with one authorised firm are aggregated against one £120,000 limit.

For example, a sole trader holding £75,000 in a business account and £65,000 in personal savings at the same authorised firm has £140,000 combined against a £120,000 limit. Opening a second account under the trading name at the same bank does not create a second limit.

Ordinary business partnerships do not simply receive one limit per partner

FSCS guidance says that where a business account is jointly held by two or more business partners, one £120,000 limit is generally available in relation to the business account rather than multiplying the limit by the number of partners. Individual partners may still have separate protection for deposits held personally in their own names.

This differs from an LLP because an LLP is a separate legal entity. Businesses should therefore identify their legal form before calculating protection. The word "partnership" in the account name does not by itself tell you which rule applies.

Check the authorised firm because different brands can share one licence

FSCS warns that several bank brands can share the same banking licence. Deposits spread between those brands can therefore count toward one protection limit. The easiest route is the FSCS bank and savings protection checker, which uses Financial Services Register data and groups firms linked under the same authorisation.

If a company wants to keep £300,000 of reserve cash within deposit protection, it may need to spread the money across genuinely separate authorised institutions rather than three brand names inside one banking group. Record the Firm Reference Number or authorised entity in the treasury schedule so the position remains clear after rebrands or acquisitions.

Do not assume a payment or e-money account has FSCS deposit protection

The FCA states that money held with non-bank payment providers such as authorised payment institutions and electronic money institutions is not covered by FSCS deposit protection. Relevant customer funds are instead protected through safeguarding rules where the regulatory regime requires it.

Safeguarding and FSCS are not interchangeable. In a provider failure, safeguarded funds may be returned through an insolvency process, which can take time and may involve costs. Before leaving significant reserves in a fintech or wallet, identify whether the legal provider is a bank deposit taker or a non-bank payment institution and understand the protection model.

For treasury purposes, record the protection type next to each balance. A schedule might show one account as an FSCS-eligible bank deposit, another as a safeguarded e-money balance and another as an investment product with different rules. That prevents all cash-like products being treated as though they carry identical insolvency protection.