Temporary High Balance Protection

Selling a home or receiving an inheritance can leave you with a bank balance far larger than the £120,000 that the Financial Services Compensation Scheme normally protects. Temporary high balance protection exists for exactly that situation. It raises the safety net to £1.4 million for six months, so a large sum sitting in your account after a major life event stays covered if the bank fails¹.

The protection applies to money connected with specific events: selling your main home, releasing equity, a marriage or civil partnership, divorce, retirement, redundancy, disability or incapacity, and compensation for personal injury or wrongful conviction³. It does not apply to buy-to-let property sales, holiday homes, or savings you have built up over time towards a property purchase⁴.

The limit rose from £1 million to £1.4 million on 1 December 2025, at the same time as the standard deposit limit increased from £85,000 to £120,000⁵. The six months runs from when the money is first deposited or becomes legally transferable, not from the date of the life event itself⁶.

Temporary high balance protection: up to £1.4 million for six months

The Financial Services Compensation Scheme protects deposits in banks, building societies and credit unions. The standard limit is £120,000 per person, per institution⁷. Temporary high balance protection sits on top of that, covering up to £1.4 million for six months when a qualifying life event leaves you holding an unusually large sum¹.

The £1.4 million figure applies to most temporary high balances. The Bank of England's policy statement confirms that the limit increased from £1 million with effect from 1 December 2025, following a consultation that proposed the rise to account for consumer price inflation since July 2015⁵. The standard £120,000 limit also took effect from the same date⁵.

Not every large balance qualifies. The money must be connected with one of the listed life events and deposited into an eligible account. The FSCS describes temporary high balances as "exceptional and short-lived deposits which result from certain life events"³. The protection is automatic: you do not need to apply for it in advance, but you will need to provide written evidence if you claim⁴.

The scheme covers deposits in banks, building societies and credit unions that are authorised by the Prudential Regulation Authority or the Financial Conduct Authority⁹. Some products, such as NS&I accounts, have different arrangements: NS&I is backed by the Treasury rather than the FSCS, so the full amount is secure¹¹.

Life events that qualify for temporary high balance cover

The FSCS lists the events that can create a temporary high balance. They fall into two broad groups: property transactions and major life changes³.

Property-related events include money deposited in preparation for buying a property, the proceeds of selling your main home, and money released through equity release³. The property must be your only or main residence. Buy-to-let properties and holiday homes are excluded, and general savings you have set aside for a property purchase do not qualify⁴.

Major life events include:

• Death of a partner or relative, leading to an inheritance
• Marriage or entering a civil partnership
• Divorce or dissolution of a civil partnership
• Retirement
• Redundancy or dismissal
• Disability or incapacity
• Compensation for personal injury
• Compensation for wrongful conviction
• Insurance benefits paid out³

The money must be connected with the event. An inheritance left to you after a death qualifies. A redundancy payout qualifies. A divorce settlement qualifies. But a large balance that has simply built up over years of saving does not, even if it exceeds £120,000³.

For personal injury and incapacity payments, there is no monetary limit at all. The Bank of England's policy statement confirms that no cap applies to temporary high balances arising from a payment in connection with personal injury or incapacity⁵. The full amount is protected for six months.

When the six months starts and when a new period begins

The six-month clock starts when the money is first deposited into your account, or from the moment the deposits become legally transferable⁶. That is the point at which the funds are credited or become yours to access, not the date of the life event itself.

If your solicitor receives the proceeds of a house sale and holds them in a client account before transferring them to you, the six months does not start when the solicitor receives the money. It starts when the money reaches your account or becomes legally transferable to you⁶. Keep a record of that date.

A new six-month period can begin if a separate qualifying event occurs. If you sell your home and later receive an inheritance, those are two distinct events, each with its own protection period. But selling one home and buying another is treated as connected transactions relating to your main residence, so the period is not automatically doubled³.

The FSCS has published research showing that 28% of UK adults have received, or know someone who has received, a lump sum of £120,000 or more¹². Awareness of the temporary high balance rules matters because the protection is not automatic beyond the standard limit: you must be able to show that the money qualifies.

Limit per person, per life event, per bank

The £1.4 million limit applies per person, per institution. If you hold a temporary high balance in a joint account, each named person benefits from protection of up to £1.4 million⁶. A joint account with two named holders could therefore be protected up to £2.8 million in total.

The limit is also per banking licence, not per brand. Several brands may share a single licence, so money held in accounts with different brands under the same licence counts together towards one limit. The FSCS provides a checker to help you work out which licence your accounts sit under¹³.

The £1.4 million figure is a cap on the temporary high balance protection, not a target. If your balance is £1.4 million after a house sale, the full amount is covered for six months. If it is more than that, the first £1.4 million is covered and the rest is not¹.

For personal injury and incapacity payments, the no-limit rule means the full amount is protected regardless of size⁵. This reflects the fact that such payments are intended to cover a lifetime of care and cannot be replaced.

Where temporary high balance protection does not apply

Temporary high balance protection has clear boundaries. Understanding them matters because a balance that falls outside the rules is protected only up to the standard £120,000 limit⁷.

The main exclusions are:

• Buy-to-let properties and holiday homes. Only your main residence qualifies. Proceeds from selling an investment property or a second home are not covered⁴.
• General savings for a property. Money you have saved over time towards a deposit does not qualify, even if you eventually use it to buy a home⁴.
• Money held with unregulated firms. The FSCS only covers deposits with authorised banks, building societies and credit unions⁹.
• Debt management arrangements. Money paid under an individual voluntary arrangement arranged by insolvency practitioners is not protected⁴.
• Some insurance claims. Marine insurance and credit insurance claims are not eligible for FSCS protection¹⁴.

The protection also does not apply to investments. Stocks and shares ISAs, investment funds and shares held on a platform have different limits and rules. The temporary high balance rules are specific to cash deposits in banks, building societies and credit unions⁹.

If you are unsure whether your money qualifies, the FSCS checker can help you work out what is protected and under which licence your accounts sit¹³. MoneyHelper also provides guidance on choosing a bank account and understanding protection¹⁵.

Keeping large balances protected after the six months

Once the six months ends, the temporary high balance protection stops. The standard £120,000 limit applies again, and anything above that is no longer protected if the bank fails⁷.

There are several ways to keep a large balance protected after the six-month period:

• Spread the money across institutions. Each bank, building society or credit union has its own £120,000 limit per person. Moving money to a different institution gives you a fresh limit⁷.
• Check which brands share a licence. Some brands operate under the same banking licence, so money held with them counts together. The FSCS checker shows which brands share a licence¹³.
• Use NS&I. NS&I accounts are backed by the Treasury rather than the FSCS, so the full balance is secure. This makes NS&I a common choice for holding large sums temporarily¹¹.
• Consider a joint account. A joint account gives each named person their own £120,000 limit, so a couple could hold £240,000 in one institution⁶.
• Pay down debt or invest. Using the money to reduce a mortgage or invest it changes the protection rules entirely. Investments have different limits and risks¹⁶.

If the bank fails while you hold a temporary high balance, you will need to provide written evidence that your deposits qualify⁴. The FSCS aims to pay most claims within seven days for straightforward cases, but temporary high balance claims can take longer. The scheme says complex cases, including temporary high balance claims, may take up to three months⁹. Most FSCS claims take between five months and one year overall¹⁷.