The amount of money protected if a UK bank or building society goes bust will rise to £120,000 from 1 December, a 41% increase from the current £85,000 limit. The new limit, announced by the Bank of England's Prudential Regulation Authority (PRA), is higher than the originally proposed £110,000 due to higher-than-expected inflation, currently at 3.8%.
The Financial Services Compensation Scheme (FSCS) will compensate eligible customers up to the new limit per person per firm, typically within seven days of a lender's failure. This is the first increase in eight years. The protection for temporary high balances, such as from selling a main residence or receiving an inheritance, will also rise from £1 million to £1.4 million, covering these balances for up to six months.
The higher limit may encourage wealthier savers to deposit more money, potentially conflicting with government aims to boost investment in UK companies. The change comes five days after the 26 November budget, where Chancellor Rachel Reeves may reduce tax breaks on cash Isas to encourage stock market investment. Recent Bank of England data shows savers are depositing billions monthly, with £5.8 billion into easy access accounts and £2.4 billion into cash Isas in September alone.
Despite the increase, most UK savers hold far less than the limit. According to a Financial Conduct Authority report, about 10% of UK adults have no cash savings, and the median amount for those who do is between £5,000 and £6,000. Another survey found the average UK savings in 2025 is £16,067. PRA chief executive Sam Woods said the new limit will help maintain public confidence in the safety of their money.
