This week has seen unprecedented panic in the UK Banking system. I have been inundated with calls from clients worried, not just about their personal deposits with banks, but also concerned about their business banking arrangements.
The Government has indicated they will protect retail investors in UK banks, and with Icesave they have said that any investor with savings in excess of £50,000 which is not protected by the Financial Services Compensation Scheme will have their excess covered by the Government.
What has not been widely reported is that some small businesses are covered by the Financial Services Compensation Scheme (FSCS).
The FSCS deposit protection scheme was set up primarily for private individuals, the FSCS says.
But small businesses get similar protection to savers if the limited company can satisfy at least two of the following three criteria:
- A turnover of not more than £6.5m
- A balance sheet total of not more than £3.26m
- A total number of employees of not more than 50
- Partnerships – not the individual partners – could claim up to £50,000
For a sole trader account, the sole trader could claim up to £50,000 in total, but can only claim for either personal or business accounts with each institution – they cannot claim for both.
There may be other ways to mitigate risks for businesses, and if you have funds in excess of £50,000 with your business bank and you are concerned, call us on 0161 832 4451.