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I am a director of a limited company in the UK. I live here and sell my services within the UK.

If a bank goes bust, by law, a bank has to protect my deposits to up to £85k.

  1. Can I have multiple business bank accounts in different banks so that if deposited money in one of the accounts exceeds £85k I start depositing money to the other bank account?

  2. If I already had over £85k on one of the bank accounts, can I just move money to a different business bank account? Or will it count as a withdrawal and I would have to declare it as for example a dividend?

  3. Does FSCS distinguish between my personal bank account and my company bank account? Or is it treated as one due to the fact both are authorised by me?

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  • You can freely use as many banks as you like - it is just a business matter and "which bank(s) you use" is not even reported in any way to the authorities. You can freely move money between bank accounts, if for some reason you want to.
    – Fattie
    Commented Aug 6, 2018 at 6:51
  • Regarding your third separate question, you CAN actually just use a personal bank account, it is not illegal but it would be a real mess. Also it is a massive red flag to get audited or checked-out in another way. There is very little reason you would not just get one (or more!) business bank accounts, they cost nothing or only a few pounds. (If you think you can "get away" with mixing money to avoid a few pounds tax in some way - it is inconceivable, "they have thought of that" :) Forget it.)
    – Fattie
    Commented Aug 6, 2018 at 6:53
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    Technically, it isn't "a bank has to protect my deposits to up to £85k" but that if a bank fails to protect your deposits, the FSCS will step in, investigate, and generally compensate depositors. Note also that it is £85k per financial institution... so, for instance, NatWest and Royal Bank of Scotland are the same entity as far as FSCS is concerned, and accounts with each would only be protected up to a combined £85k.
    – TripeHound
    Commented Aug 6, 2018 at 7:43

2 Answers 2

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The bank has to protect the total of your deposits with them, not each individual account. You'd need the second account at a different bank to make this work. It is presumably less likely that two banks will go bankrupt than just one.

As far as I am aware there is no rule on how many bank accounts a limited company can have, nor on how many you can have. Transfers between bank accounts owned by the same company are not dividends.

The accounts of you and your company should be separate. If you're not clear on that point you should have a word with your accountant, because you can get into deep trouble by not respecting the boundary.

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  • I should have written the third question a bit differently. I was more concerned about the fact that having both, my personal bank account and my business bank account in the same bank, if the bank goes bust, would FSCS treat both accounts as separate accounts and protect the deposits to up to £170k?
    – matewilk
    Commented Aug 6, 2018 at 8:46
  • @matewilk You might need to ask the FSCS that (and report back if they answer)... I don't recall seeing anything in their FAQs that cover such a topic. For a (married?) couple, the limit per institution is doubled to 170k; the only mention of "business" accounts I've seen the note that some "large" companies will not be covered by FSCS. E.g. from Eligibility Rules "Private individuals are generally protected. However, other types of claimants, such as businesses and charities, may be eligible depending on the type of claim."
    – TripeHound
    Commented Aug 7, 2018 at 8:02
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Also worth keeping in mind is that the £85k FSCS can be misleading in the case where a specific licenced bank operates multiple banking brands. In which case if you open two accounts with two banking brands which both operate under a single licenced bank, then your theoretical £170k would only actually be insured against £85k.

This is not always obvious, so check the T&Cs with your bank of choice to understand if it is an independently licenced bank, or is part of a group of banking brands.

You can move money between any of your Ltd bank accounts as you choose, this has nothing to do with dividends. Dividends are payments to directors based on profit for the year, aka. money moving out of the Ltd company to personal bank accounts

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