The Financial Services Compensation Scheme (SCS), which is government-backed, provides £85,000 financial protection for every UK-regulated bank account, including personal and business current accounts, savings accounts and cash ISAs. If a banking institution goes bust, each individual person is covered up to £85,000 per institution.
If you have more than one account with the same banking institution, you will not receive £85,000 per account. You will only receive one payout per institution, so it’s important to bank with different institutions if you have more than £85,000 in the bank.
Bear in mind, a limited company is recognised as a legal person, just like you, so your company bank account and personal bank account will both be protected up to £85,000, even if they are held at the same banking institution. However, the rules are different for sole traders because this type of business structure is not recognised a legal person - a sole trader’s business bank account will not protected in addition to the sole trader's personal account if both accounts are held at the same institution.
If you do have accounts with more than one bank, it is important to check whether these banks are part of the same group. Many banks are owned by larger parent companies, so they will fall under the category of one institution. If you need to separate your money into different accounts, make sure these accounts are not owned by the same group otherwise you will only be protected up to £85,000.
To find out more about protecting your cash, please click here.