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Can you keep money accidentally paid into your bank account?

We all dream of receiving an unexpected windfall, but what are your rights if you receive an accidental payment into your bank account? We explain all the rules.

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There’s plenty of ways you can end up with an accidental windfall in your current account, whether it’s a banking error, an incorrect tax rebate, or even an overpayment from your employer. It sounds like a dream come true, but can you keep the cash?

In a nutshell, no. Legally, if a sum of money is accidentally paid into your bank or savings account and you know it doesn't belong to you, then you must pay it back.

Why you can’t keep accidental payments

Keeping any money wrongly credited to your account could lead to you being charged with ‘retaining wrongful credit' under the Theft Act 1968.

You could be guilty of an offence if a wrongful credit is made to your account and:

  • You know the credit has been made incorrectly

  • You don't take steps to cancel the credit

What not to do when money appears in your account

No matter how tempting it is, don't immediately go out and spend the money. Some people think that if the cash is gone then it’s too late, but in reality, you will be liable to pay it back anyway, even if it’s no longer in your account. This includes:

  • When a bank or individual accidentally paid money into your account

  • If you are overpaid by your employer

What you should do with the money instead

If you receive an unexpected payment into your current account, you should always inform your bank immediately.

Waiting for the bank to notice their mistake could take weeks, and during that time the temptation to spend will be harder to resist.

Think about how you would feel if the roles were reversed, and it was your money sitting in someone else's account.

Even if the money is from your employer or from the taxman, you still need to let your bank know. If it’s your bosses, you might also want to flag the issue to them to stop it happening again.

What happens if you do keep the money?

Typically, you’ll be asked to pay back the cash. You could also be jailed if you splash the cash when you know it’s not yours. According to the Theft Act 1968, the maximum sentence is ten years in prison.

For instance, a woman from Blackburn was sentenced to 10 months in prison after she went on a spending spree, after receiving £135,000 in error from Abbey bank.

Windfall winners

There have been some exceptional cases where individuals have been allowed to keep money accidentally paid to them. This can happen in two ways:

  • If you have a credible argument as to why you should keep it: For example, a part-time bank worker who was overpaid £7,500 a year for three years won a court case to keep her windfall. A tribunal ruled in her favour after she successfully argued she had assumed the increase was a pay rise that she had been promised by her employers.

  • If you did not realise you were given money in error: This argument was used successfully in 1950 in a case between Lloyds Bank and Cecily Kate Brooks. Ms Brooks, expecting a similar payment to the amount wrongly credited to her, argued that she spent the money believing that it belonged to her. 

These sorts of cases are the exception not the rule, and pleading ignorance is unlikely to work in your favour.

Can you earn interest on payments made in error?

You may be able to put the windfall into a separate savings account and earn interest, until you have rectified the error with the bank or the rightful owner.

This strategy was successfully adopted by a postal worker in the US who received a pay rise he knew he wasn't entitled to, and immediately informed his supervisors of their error.

While he waited for the situation to be resolved, he banked his pay rise in a separate savings account to accrue interest.

It was three years before his employers corrected their mistake and, despite having to pay back all the money he was overpaid, his financial savvy meant he ended up keeping nearly £500 in interest earned.

Honesty is the best policy

Do not be tempted to spend your windfall, even if nobody contacts you immediately. Banks regularly carry out audits which means they will always catch up with you.

Honesty is always the best policy and, by informing your bank or employer promptly, you could even find yourself on the receiving end of a reward.

There are plenty of examples where people have been allowed to keep some of their overpayments by being honest upfront. But even if there’s no reward, it’s better than the punishment for being caught spending cash that’s not yours.

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