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The short answer
Money in your UK account is treated as yours by default: by your bank, by the DWP if you claim means-tested benefits, and for FSCS limits. If you hold a relative's money, record in writing whose it is, why you hold it and when it will be returned, keep it in a separate account, and be ready to show your bank and any benefits office that evidence.
Why this happens so often
A brother saving for his UK visa, a parent wanting pounds kept safe, a cousin paying school fees through you: holding money for family is common in Nigerian households abroad. The difficulty is that every institution sees only the name on the account.
Risk one: your bank's questions
UK banks must understand what an account is used for. Regulation 28 of the Money Laundering Regulations 2017 requires firms to assess the purpose and intended nature of a relationship and to monitor it on an ongoing basis, including the source of funds where necessary. Large inbound payments from people the bank does not know, followed by payments out to others, fit the patterns banks are asked to look at.
If the bank cannot see why the money is there, it may block payments or freeze the account while it checks. The Financial Ombudsman Service says blocks for fraud checks are usually reasonable, though it looks at how long they last and how the bank communicates. Our guide to a UK account frozen after a Nigeria transfer covers the next steps.
Risk two: means-tested benefits
Universal Credit has a capital limit. GOV.UK says you must have £16,000 or less in money, savings and investments, and that banks may share information with the DWP, including balances and transactions abroad. According to Shelter's guide to the capital rules, the first £6,000 is ignored and each £250 or part between £6,000 and £16,000 counts as £4.35 of monthly income; above £16,000 there is no entitlement, and a couple's capital is combined.
Worked example: £12,000 of a sister's savings sits in your account alongside £3,000 of your own. A balance of £15,000 is £9,000 above £6,000, which is 36 blocks of £250, so £156.60 a month is treated as income. Whether money you hold for someone else counts as yours depends on the evidence that it belongs to them, so tell the DWP and keep the paperwork. See sending money to Nigeria while on Universal Credit.
Risk three: tax and inheritance
- Interest. Interest paid on an account in your name is reported in your name. If the money is not yours, keep records showing who the interest belongs to.
- Gifts. If you later keep the money or spend it on yourself, that is a gift from your relative. Inheritance Tax rules on gifts look at the giver; see the seven-year rule.
- If you die. Money in your sole name normally forms part of your estate unless there is evidence it belonged to someone else. A written record protects your relative.
Tax points here are information, not advice; a solicitor can draw up a simple declaration of trust if the sum is large.
Risk four: FSCS cover
This one is rare but real if the sum is large.
The FSCS limit of £120,000 is per person per firm. A relative's money in your account uses up your cover at that bank, and theirs is not counted separately unless the account is set up in a way the bank and FSCS recognise.
Risk five: family disagreement
The risk families mention most is not the bank or HMRC but each other. Without a record, memories differ about how much was sent, what was spent and what was agreed. A relative in Nigeria may believe the money earned interest; you may remember paying a fee to send part of it back. Months later, nobody can prove either version.
A short written note and a separate account solve most of this. So does sharing a statement every few months. Where the relative is elderly, think also about what happens if you are ill or travelling and they need the money: does anyone else know where it is, and could they get it without your login?
How to document it
- Write a short note, signed by you both: whose money it is, the amount, why you hold it, and when or on what condition it will be returned.
- Keep it in a separate account from your own money, so the balance is easy to show.
- Keep evidence of where it came from: their bank statement, the transfer record.
- Record every payment out on their behalf with a reference such as "for Chika, school fees".
- If you claim benefits, tell the DWP and give them the note before they ask.
- Set an end date and stick to it.
Where Pryme fits
Often the cleaner answer is for your relative to hold the money in their own name. Pryme Personal Accounts can be opened from any country and hold NGN, GBP, USD and EUR, so a family member can keep their own balance rather than using yours. See opening an account and the multicurrency account.
Questions people ask
Can I keep my brother's money in my UK bank account?
You can, but the bank, the DWP and the FSCS will treat it as yours unless you can show otherwise. Document it and keep it separate.
Does money I hold for someone affect my Universal Credit?
It may. Capital over £6,000 reduces UC and over £16,000 ends entitlement; tell the DWP and give evidence of whose money it is.
Why did my bank block a payment from a relative?
Banks must understand the purpose of transactions under the Money Laundering Regulations. Explain the relationship and show evidence.
Who pays tax on interest on money I hold for family?
Interest is reported in the account holder's name. Keep records if it belongs to someone else, and take advice for large sums.
Sources
- legislation.gov.uk: Money Laundering Regulations 2017, regulation 28 · accessed Oct 2026
- Financial Ombudsman Service: Frozen accounts and blocked payments · accessed Oct 2026
- GOV.UK: Universal Credit eligibility · accessed Oct 2026
- Shelter Legal England: Universal Credit capital rules · accessed Oct 2026
- GOV.UK: Inheritance Tax on gifts · accessed Oct 2026
- FSCS: Check your money is protected · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.