Starting 1 December 2025, people with money in UK banks, building societies, and credit unions will benefit from a much higher level of protection on their savings. The government is raising

the deposit protection limit from £85,000 to £120,000, giving savers extra peace of mind if their financial institution ever goes under.

This protection comes from the Financial Services Compensation Scheme (FSCS), which automatically steps in if a bank or similar institution fails. Customers don’t need to do anything to receive the higher protection — the new limit will simply apply behind the scenes. If the worst happens, the FSCS aims to return people’s money, up to the new £120,000 cap, within seven days.

The increase marks the first update to the limit since 2017. Regulators say it’s needed both to keep up with inflation and to ensure people continue to feel confident that their money is safe. Sam Woods, deputy governor at the Bank of England and head of the Prudential Regulation Authority (PRA), said the change is designed to “maintain the public’s confidence in the safety of their money” and support the financial system as a whole.

Interestingly, the final £120,000 limit is higher than the £110,000 the PRA originally proposed, after further consultation with the banking industry.

One important detail for customers: the limit applies per banking licence, not per brand. So if a bank operates multiple brands under the same licence, the £120,000 protection covers the total across all your accounts with that group.

Industry and consumer groups have welcomed the move. Martyn Beauchamp, chief executive of the FSCS, said the increase will give people more confidence that their money is safe “from the very first penny.” Consumer group Which? also called the change a “sensible decision,” saying stronger protections can boost trust without holding back economic growth.

Alongside the main limit increase, the FSCS is also raising the amount it covers for temporary high balances—such as money from selling a home or receiving a large insurance payout. That protection will rise from £1 million to £1.4 million, also from 1 December 2025, and will apply for six months from the date the funds are deposited.

UK Finance’s managing director of Personal Finance, Eric Leenders, said the update was overdue, noting that inflation has significantly eroded the value of the previous £85,000 limit since it was set eight years ago.

Overall, the changes are designed to give savers greater reassurance at a time when confidence in the economy matters more than ever.