Your savings and the bank that holds them
Most people choose a savings account by its interest rate. The bank behind the account is part of the choice too.
This page explains how savings are protected in the UK, how to check a bank, and how tax on interest works.
How your savings are protected
The Financial Services Compensation Scheme (FSCS) protects money held with UK-authorised banks, building societies and credit unions. If one of them fails, FSCS pays compensation automatically, up to £120,000 per person at each firm. In most cases it pays within seven working days.
The limit rose from £85,000 to £120,000 on 1 December 2025. Joint accounts are protected up to £120,000 for each account holder.
A large sum can sit in an account for a short time after a life event, such as a house sale or a redundancy payment. FSCS calls this a temporary high balance. It protects qualifying balances up to £1.4 million for six months from the date the money went in.
Brands that share a licence
Some banks in the same group share one banking licence. FSCS treats them as a single bank. The £120,000 limit then covers everything you hold across those brands together.
The FSCS protection checker lists the brands that sit under the same firm. The Financial Conduct Authority (FCA) register shows which banks share a licence.
Checking the firm is real
The FCA and the Prudential Regulation Authority authorise UK banks. The FCA keeps a public register of every firm they have authorised.
Scammers sometimes copy the name of a genuine firm, and sometimes the FSCS logo too. The FCA calls these clone firms and lists the ones it knows about on its Warning List.
If you deal with a firm that is not authorised, you lose two protections. The Financial Ombudsman Service cannot take your complaint, and FSCS cannot repay you if the firm fails.
How Bank Rate feeds through
The Bank of England sets Bank Rate. It pays this rate to banks and building societies that hold money with it.
When the Bank raises Bank Rate, banks usually raise the interest they pay on savings. When it lowers the rate, they usually lower theirs. Its Monetary Policy Committee meets eight times a year to decide.
Tax on the interest
Most people can earn some interest without paying tax on it. In October 2026, GOV.UK lists a Personal Savings Allowance of £1,000 for basic rate taxpayers and £500 for higher rate taxpayers. Additional rate taxpayers get no allowance.
If your other taxable income is under £17,570, you may also get the starting rate for savings. That lets you earn up to £5,000 of interest tax-free. Interest in an ISA is not usually taxed.
After 5 April each year, your bank tells HMRC how much interest it paid you. If you owe tax, HMRC sends you a calculation.
If something goes wrong
Start with a complaint to the bank. For most complaints it has up to 8 weeks to reply.
If you are unhappy with its final response, you can take the complaint to the Financial Ombudsman Service. The service is free. You need to contact it within 6 months of the date on the final response.