FSCS Deposit Protection Limit Rising to £120,000 from December
The Prudential Regulation Authority (PRA) has confirmed that the Financial Services Compensation Scheme (FSCS) deposit protection limit will increase from £85,000 to £120,000 from the start of December. HM Treasury has approved the change, marking the first rise in the limit since 2017.
The new £120,000 threshold applies per depositor, per PRA-authorised bank, building society or credit union.
The final figure is higher than the £110,000 initially proposed earlier in the year, following consultation feedback and updated inflation data.
Temporary High Balances Limit Also Increasing
Alongside the core change, the limit for Temporary High Balances (THBs) will rise from £1 million to £1.4 million on 1 December.
THB protection applies to short-term spikes in account balances linked to certain life events — for example, receiving an insurance payout or the proceeds from selling a property.
What This Means for Your Business
For businesses that hold significant cash reserves to cover working capital, payroll or supplier payments, the increased limit is welcome news.
However, it’s important to remember:
The limit is applied per depositor, per PRA-authorised institution
If your eligible cash reserves exceed £120,000, you may benefit from spreading funds across multiple banks
Some banking groups operate several brands under one licence, meaning deposits across those brands share a single protection limit
If your business holds substantial reserves, it’s worth double-checking how your accounts are structured.
A Good Time to Review Your Cash Position
Many owner-managed businesses see cash levels rise and fall throughout the year. With the FSCS limit increasing, now may be a useful moment to review:
How much cash your business actually needs for day-to-day operations
Whether your funds would be better protected by diversifying across institutions
If excess reserves could be put to better use — either reinvested in the business or withdrawn (e.g. via dividends) to support your personal plans
A simple cash flow review can help clarify what’s needed to cover routine expenses, tax liabilities and planned spending.
Need Advice?
The right approach will depend on your business strategy, tax position and future plans. If you’d like support reviewing your reserves or understanding how these changes affect you, the Alera team is here to help.
Just get in touch — we’d be happy to talk it through with you.