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- FSCS protection for business accounts: are your funds covered?
Are business bank accounts protected by the FSCS?
The FSCS protects deposits in UK business accounts, but the rules differ depending on your business type.
If your business keeps money in a bank or building society, it’s important to understand what protection is in place if your chosen financial institution fails.
Like personal bank accounts, the Financial Services Compensation Scheme (FSCS) protects eligible deposits held in business accounts up to a certain limit. However, the rules for businesses can be more complex than for personal accounts.
Here, we explain how FSCS protection works for business accounts and what to watch out for.
At a glance
The Financial Services Compensation Scheme (FSCS) protects bank account deposits of up to £85,000
The FSCS covers both personal and business accounts, but different rules can apply to businesses
E-money institutions, foreign banks and payment service providers do not offer FSCS protection
Some providers share the same banking licence, meaning you only have £85,000 of cover across the different brands
Find the right savings account for your business
What is the FSCS?
The Financial Services Compensation Scheme is the UK’s official deposit protection scheme. Set up in 2001, it steps in when a bank, building society, credit union, insurer or certain other financial firm goes bust and can’t return money owed to customers.
In such cases, the FSCS provides compensation up to set limits, helping to protect individuals and businesses from losing their savings.
It means that if you have up to £85,000 in a savings account with a bank, and that bank goes bust, you get all your money back. However, if you have £90,000 in the same account, you won’t have protection for the remaining £5,000.
The FSCS applies to both personal and business bank accounts, but the rules are slightly different for businesses, depending on whether you operate as a limited company, sole trader or partnership.
How does FSCS protection for business accounts work?
The FSCS provides the same £85,000 protection limit for eligible business deposits as it does for personal accounts. It applies to both business current accounts and business savings accounts.
However, the £85,000 limit applies to a single entity. This means that if you’re a sole trader with a personal account and a business account with the same provider, they count towards the same £85,000 limit and you can only make one claim.
In other words, if you have £50,000 in your business account and £40,000 in your personal account with the same banking group, the FSCS only covers £85,000 out of your total of £90,000. This is because there is no legal distinction between your personal and business finances.
By contrast, if you’re a limited company, your business is a separate legal entity. This means that if you have a business account and a personal account with the same bank, each account has its own protection limit of £85,000 under the FSCS.
Another key difference is how joint accounts work. With personal joint accounts, the £85,000 limit applies to each account holder, giving a total limit of £170,000. However, this doesn’t apply to partnerships, so if you have a joint business account held by two or more people, you only have the standard protection limit of £85,000.
Are all financial institutions covered?
No, the FSCS only applies to money held with a bank or financial institution that’s authorised by the Prudential Regulation Authority or the Financial Conduct Authority (FCA).
This includes most UK banks, building societies and credit unions, but the FSCS doesn’t cover:
E-money institutions, such as some digital providers, fintechs or payment apps, that have an e-money licence rather than a UK banking licence. Instead, these must usually safeguard funds in separate accounts
Payment service providers that simply process transactions
Foreign banks that operate in the UK but have authorisation from another country – these may offer protection under their own country’s deposit guarantee scheme instead
Additional FSCS compensation rules
Another important consideration is that some financial institutions share banking licences, meaning they count as one for FSCS purposes. For example, if you have money held in both a First Direct account and an HSBC account, you only have cover up to the £85,000 limit, because they count as the same bank.
The same applies to RBS and NatWest, as well as Halifax and Bank of Scotland. You can view a full list of providers that share banking licences on the Bank of England website.
If you have savings of more than £85,000, it’s worth ensuring they are held with different institutions with different banking licences, so you’re fully covered.
Also note that the FSCS does not cover all types of financial losses. This means you don’t have protection against loss of income from market fluctuations, your own negligence or fraud.
FAQs
Are business savings protected by the FSCS?
Yes, the FSCS protects business savings up to the £85,000 limit. Just keep in mind that if you’re a sole trader with a personal account and a business savings account with the same banking group, the £85,000 limit applies to both accounts combined. If you have more than £85,000 in savings, it’s worth moving some of the cash to another provider.
Is my money safe in a business bank account?
If your money is held with a financial provider that’s regulated by the Prudential Regulation Authority (PRA) or the Financial Conduct Authority (FCA), the FSCS protects your funds up to the limit of £85,000. This means you should get your money back if your provider collapses.
What if I have more than £85,000 saved with one bank?
If you have more than £85,000 in accounts held with the same bank, it’s generally safer to move some of it to a different provider to ensure the full amount remains protected if your bank fails. Just make sure the two providers don’t share the same banking licence.