Savings and investment information is for educational purposes only. The value of investments can go down as well as up. Cash savings up to £85,000 per person per institution are protected by the FSCS.
Contents
Got a large sum to save? Here’s where to put it safely while earning the best returns.
FSCS Protection: The £120,000 Limit
What Is FSCS?
Protection
Details
What
Financial Services Compensation Scheme
Coverage
Up to £120,000 per person per bank
Joint accounts
Up to £240,000
If bank fails
Money returned within 7 days
Applies to
All UK-authorised banks
Key Rule
If You Have
Protection
£50,000 in one bank
Fully protected
£120,000 in one bank
Fully protected
£150,000 in one bank
£120,000 protected, £30,000 at risk
£150,000 split across two banks
Fully protected
Banks That Share a Licence
Same Banking Licence
Different Licences
Halifax & Bank of Scotland
HSBC
NatWest & RBS
Barclays
First Direct & HSBC
Lloyds
Nationwide (building society)
Santander
Check before spreading money — some banks share a licence!
Where to Save Large Amounts
Option 1: Multiple Bank Accounts
Strategy
How It Works
Split savings
Across different banking licences
£120k limit each
Stay under at each provider
Example for £200k
£120k Bank A, £80k Bank B
Option 2: NS&I (Government-Backed)
NS&I Product
Limit
Guarantee
Premium Bonds
£50,000
100% HM Treasury
Income Bonds
£1,000,000
100% HM Treasury
Direct Saver
£2,000,000
100% HM Treasury
NS&I is backed by the government — unlimited protection, not just £120k.
Option 3: Fixed-Rate Bonds
Product
Features
1-year fixed
Better rate, 12-month commitment
2-year fixed
Often best rates
Split across banks
For FSCS protection
Consider term
Match to when you need money
Option 4: Cash ISAs
Type
Features
Easy access Cash ISA
Flexibility, decent rates
Fixed-rate Cash ISA
Better rates, term commitment
Tax-free
Interest doesn’t count toward tax
Allowance
£20,000 per year total ISA limit
Best Accounts for Large Savings
Easy Access (Sample Rates)
Provider
Type
Rate
FSCS
Regular banks
Easy access
3-4.5%
Yes
Chase
Saver account
Competitive
Yes
Marcus (Goldman Sachs)
Easy access
Competitive
Yes
Chip
Instant access
Competitive
Yes
Fixed-Rate Bonds (Sample Rates)
Term
Typical Rate
1 year
4-5%
2 years
4-4.5%
3 years
4%
5 years
3.5-4%
Rates change constantly — always check current offers.
NS&I Products
Product
Rate/Prize Fund
Access
Premium Bonds
~4% prize fund
Easy
Income Bonds
Variable (check current)
Easy
Direct Saver
Variable (check current)
Easy
Strategy for Different Amounts
£50,000
Option
Approach
Simple
One high-rate account (under FSCS limit)
Better
Mix of fixed rates and easy access
Tax-efficient
Max ISA allowance first
£100,000
Priority
Action
1
£100,000 now fits within a single £120,000 FSCS limit
2
For extra margin, split e.g. £70k Bank A, £30k Bank B
3
Or £50k NS&I Premium Bonds + £50k in bank
4
Consider tax position
£250,000+
Approach
Details
Multiple banks
At least 3 different licences
NS&I
Up to £50k Premium Bonds + other NS&I
Cash ISAs
Max ISA allowance
Consider advice
Financial adviser for large sums
Tax Considerations
Personal Savings Allowance
Tax Band
Tax-Free Interest
Basic rate (20%)
£1,000/year
Higher rate (40%)
£500/year
Additional rate (45%)
£0
Example Tax Calculation
Savings
Interest Rate
Annual Interest
Tax-Free Allowance
Taxable
£100,000
4%
£4,000
£1,000 (basic rate)
£3,000
Tax at 20%
—
—
—
£600
Tax-Efficient Strategies
Strategy
Benefit
Cash ISA
Interest is tax-free
NS&I Premium Bonds
Wins are tax-free
Partner’s account
Use their PSA too
Overpay mortgage
Tax-free “return”
Premium Bonds for Large Savings
How They Work
Feature
Details
Maximum holding
£50,000
Minimum
£25
Prize fund rate
~4% annually
Prizes
Monthly, tax-free
No guaranteed return
Luck-based
Pros and Cons
Pros
Cons
100% government-backed
No guaranteed return
Tax-free wins
May win nothing
Easy access
Interest rate may be lower overall
Good for higher-rate taxpayers
Not optimal for basic rate
Who Premium Bonds Suit
Good For
Less Suitable For
Higher-rate taxpayers
Basic-rate taxpayers
Those wanting security
Those needing guaranteed return
Supplementing other savings
Sole savings vehicle
Fun element
Pure optimisation
Fixed-Rate Laddering Strategy
What Is Laddering?
Concept
How It Works
Split savings
Across different terms
Stagger maturity
Money available at intervals
Flexibility
Some access while earning better rates
Example: £100,000 Ladder
Amount
Term
Matures
£30,000
1-year fixed
Year 1
£30,000
2-year fixed
Year 2
£20,000
3-year fixed
Year 3
£20,000
Easy access
Anytime
Benefits
Benefit
Details
Higher total return
Fixed rates beat easy access
Regular access
Something matures each year
Rate flexibility
Reinvest at current rates
Spreads risk
Not locked to one rate
Summary: Large Sum Savings Plan
Step-by-Step
Step
Action
1
Calculate total amount
2
Check FSCS coverage across providers
3
Consider tax position
4
Decide on access needs
5
Split across multiple providers
6
Mix fixed and easy access
Sample £100,000 Plan
Allocation
Amount
Purpose
Cash ISA
£20,000
Tax-free interest
Premium Bonds
£50,000
Government-backed, tax-free
1-year fixed (Bank A)
£30,000
Better rate, different licence
Total
£100,000
Fully protected
Key Principles
Principle
Why
Stay under £120k per licence
FSCS protection
Use ISA allowance
Tax-free returns
Consider NS&I
Government guarantee
Match access to needs
Don’t lock away what you need
Review rates regularly
Rates change
With large sums, safety comes first. Spread your money, stay within FSCS limits, and balance returns with access needs.