UK Deposit Protection Limit Jumps 41% to £120,000 in December

On December 1, 2025, the amount of a customer's money protected if a UK bank or building society goes bust will rise to £120,000, a 41% increase from the current limit of £85,000. This new, higher-than-expected deposit protection limit is intended to provide more cover for savers in the event of a financial firm failure.

The original plan was to raise the limit to £110,000, but it has been increased further "in light of consultation feedback and to reflect the latest inflation data," which currently stands at nearly double the 2% target at 3.8%. The Prudential Regulation Authority, the Bank of England's regulatory arm, announced the new rules.

In addition to the higher deposit guarantee, the protection for "temporary high balances" - such as from the sale of a house or an inheritance - has also been increased, from £1 million to £1.4 million. This coverage lasts for up to six months and applies to other eligible life events like retirement or redundancy payouts.

The higher deposit limit may encourage some wealthier consumers to hold more of their savings in bank accounts, which could be seen as contrary to the government's efforts to boost investment in the stock market and British companies. However, the new level will provide greater peace of mind for UK savers in the face of ongoing economic uncertainty.