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What is legal tender?

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    ‘Legal tender’ is a term that people often use, but when it comes to what can or can’t be used to pay for things, it has little practical use.

    What is legal tender?

    Legal tender has a very narrow and technical meaning, which relates to settling debts. It means that if you are in debt to someone then you can’t be sued for non-payment if you offer full payment of your debts in legal tender.

    What is classed as legal tender varies throughout the UK. In England and Wales, legal tender is Royal Mint coins and Bank of England notes. In Scotland and Northern Ireland only Royal Mint coins are legal tender. Throughout the UK, there are some restrictions when using the lower value coins as legal tender.  For example, 1p and 2p coins only count as legal tender for any amount up to 20p.

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    What is not legal tender?

    There are many acceptable payment methods which aren’t technically legal tender.  This is why the term ‘legal tender’ has little use in ordinary everyday transactions.

    Most shops accept payment by debit or credit card, and some accept cheques and contactless payments. These are safe and convenient ways to pay, despite not being classed as legal tender.

    The same is true for Scottish and Northern Ireland banknotes. Seven banks in Scotland and Northern Ireland are authorised to issue banknotes. These notes make up the majority of banknotes in Scotland and Northern Ireland and legislation is in place to ensure that noteholders have a similar level of protection as they would for Bank of England notes. Despite this, Scottish and Northern Ireland banknotes are not classified as legal tender anywhere in the UK. Equally, Bank of England notes are not legal tender in Scotland and Northern Ireland.

    A wallpaper pattern made from Scottish banknotes.  The notes are for pounds sterling but the notes only tend to be used in Scotland and are issued by privately owned banks.

    Scottish and Northern Irish banknotes

    Does legal tender status matter for everyday transactions?

    No. Whether you pay with banknotes, coins, debit cards or anything else as payment is a decision between you and the other person involved in the transaction.

    In addition, shops are not obliged to accept legal tender. If you hand over a £50 note to pay for a banana in your local grocery store, the staff are within their rights to choose not to accept it. Likewise for all other banknotes – it’s a matter of discretion.

    When do Bank of England notes stop being legal tender?

    Bank of England notes stop being legal tender when we announce that they are withdrawn.

    Before this happens, a newly designed banknote is produced and enters circulation. Bank of England notes keep their face value for all time. If your local bank, building society or Post Office is not willing to accept them, then you can exchange them for new notes at the Bank of England.

    For the most recent note withdrawals, we publicised the withdrawal date three months in advance. For the most recent paper £5 note, the period was longer: it stopped being legal on 5 May 2017.

    onepounddetail (1)

    A withdrawn One Pound banknote

    Find out more:

    The banknotes section of the Bank of England website has information on exchanging withdrawn banknotes, Scottish and Northern Irish banknotes and other topics.

    44 comments

    1. Kingsley Udofa
      15th January 2017

      Brilliant explanation in plain and simple words.

    2. Josephine bugeja
      28th January 2017

      When will we have to stop using old £20 notes, or even the £10 an others, with our shopping?
      Thank you.

      1. KnowledgeBank_Katie
        6th February 2017

        Thanks for your question Josephine!
        There are no dates set as yet for these notes to be withdrawn. The £10 and £20 paper notes will continue to be legal tender until the date we announce following release of the new notes. We will always give at least 3 months’ notice to allow you to spend or bank them, and withdrawn Bank of England notes can always be exchanged with us, even after they are unable to be spent in shops and have stopped being legal tender.
        I hope that helps, thanks for visiting KnowledgeBank.

    3. Andrew Alp
      29th January 2017

      What is the point of bank notes if shops can refuse to accept them???

      1. Queen Liz
        3rd February 2017

        Banks accept them for a lot longer. It is important they’re out of circulation to prevent fraud. If there was too many varieties of notes still in circulation it would be harder to spot forgeries. Also the older notes would be easier to copy.

      2. colin
        25th February 2017

        The point of bank notes is to make transactions easier and convenient for both parties.

        Shops can refuse to accept *anything* : notes, coins, credit cards, gold nuggets or sheep.

        Most shops *want* to sell you stuff though.

      3. Derek
        29th April 2017

        Money in any form is worth simply what you choose it to be, It has no intrinsic value whatsoever.

    4. Nicholas Cogdill
      3rd February 2017

      The point of banknotes is to serve as a store of value and a medium of exchange between a person and whoever they wish to conduct business with. Even as I don’t prefer American money, but prefer British Pounds as payment, so do others have the same rights.

    5. Brian Freeborn
      17th February 2017

      Best bit of writing I’ve ever seen from Officialdom.

      Brian

    6. Mel Hough
      20th February 2017

      With so many changes taking place in notes and coinage in a short space of time it is good to know that we can pay them into a bank for any length of time. It is highly probable and a well known fact that many elderly people keep cash at home. Much of which is often not found until that very sad time arrives.

    7. Geoffrey Laws
      1st March 2017

      Thank you for your very useful information on this fascinating subject.

    8. Philip
      6th April 2017

      Thank you for clearly stating what is legal tender and its purpose.

      Strange that legal tender is not symmetrical across the whole of the UK – is it just an English Law quirk – though even stranger that coins are legal tender across the whole of the UK ?

      1. KnowledgeBankLeanne
        26th April 2017

        Thanks for your question Phillip!
        The discrepancy between coins and notes comes from the rules defining legal tender being found in two separate pieces of legislation. The legal tender rules for coins are found in section 2 of the Coinage Act 1971. They apply throughout the United Kingdom, so unlike banknotes there are no differences in legal tender for coins between England and Wales on the one hand and Scotland and Northern Ireland on the other. Banknotes issued by the Bank of England are defined as legal tender in England and Wales under section 1 of the Currency and Bank Notes Act 1954. Section 1 also allows these notes to be lawfully put into circulation in Scotland and Northern Ireland, but only makes them legal tender there where their value is less than five pounds. As there are no longer any Bank of England notes worth less than five pounds, the effect of this rule is that no Bank of England notes are legal tender in Scotland. That does not stop individuals and businesses in Scotland or Northern Ireland from accepting them.
        I hope that answers your question, and thanks for visiting KnowledgeBank.

        1. Derek
          29th April 2017

          And this helps to define the difference between legal tender and legal currency.

    9. Charles Ellson
      8th April 2017

      The point not specifically covered is the matter of paying off a debt which already exists (e.g. goods which have already been delivered) distinct from the examples which involve a debt being prevented from being created. By that time it might be too late for the seller to get fussy about how payment is made if they are offered the entire amount in cash with any coins conforming to “legal tender” (i.e. not in vexatious form such as 500 UKP in pennies) and the notes being acceptable at par with English notes when paid into a bank.

      1. arthur
        16th July 2017

        UKP? Do you mean GBP 500?

    10. Ivan ivan
      16th April 2017

      Money is anything two people agree upon. We don’t have to use private copy righted papers printed by a private corporation. We can create and use our own money as people have been doing for 100’s of years.

    11. Daz
      30th April 2017

      “Bank of England notes stop being legal tender when we announce that they are withdrawn.”

      So, therefore the legality of a given tender is conditional upon… nothing but your whim. And we should trust it therefore because… why, exactly?

    12. Kim Jong-Il
      30th April 2017

      Hi

      After 5th May, will some banks/post offices still take the old £5 note? Or do I have to go to the Bank of England?

      The Ban

      Thank you

      1. KnowledgeBankLeanne
        18th May 2017

        Thanks for your question!

        It might be worth checking with your own bank or post office to see if they are willing to accept old paper £5 notes. However, if not , then you can always exchange your withdrawn banknotes at the Bank of England. Follow the link below for further information:

        http://www.bankofengland.co.uk/banknotes/Pages/about/exchanges.aspx

        I hope that answers your question, and thanks for visiting KnowledgeBank.

    13. John Wood
      30th April 2017

      30 April 2107

      Shop refused my £5 today on the basis that their bank would refuse them next week.

      Makes you realise how tenuous a currency really is.

      1. KnowledgeBankLeanne
        19th May 2017

        Hi John,

        Thanks for visiting KnowledgeBank!

        Anyone in the UK can refuse to accept banknotes and coins in payment for goods or services, without necessarily giving a reason for so doing. Whether or not notes have legal tender status, their acceptability as a means of payment is essentially a matter for agreement between the parties involved. The Bank of England does not have the power to intervene in commercial decisions by companies. So yes a food retailer can refuse to accept the old £5 before 5 May, however, we would encourage everyone, especially retailers, to accept our current banknotes and the Bank provides information and training material to help identify genuine Banknotes: http://www.bankofengland.co.uk/banknotes/Pages/educational.aspx

        I hope that answers your question.

    14. GR
      2nd May 2017

      Can a business (in this instance a food provider) refuse to accept the old £5 before the 5th May?

    15. JohnN
      4th May 2017

      Is there a difference between making a purchase and paying a debt?

      If I walk into my bank and offer to pay my of mortgage (a debt) with 20p pieces, can they refuse? Can they insist on my putting it in little bags? Or only banking 5 bags in a transaction?

      And if they refuse legal tender (with the Queen’s head on, n’all) does that make the debt null and void? After all, how can they start a court action against you if you have attempted to pay the debt with legal tender?

      (NB – this is for personal curiosity only… I have no plans to actually try paying off my mortgage in 20p pieces)

      1. Mike Scott
        28th August 2017

        20p pieces are only legal tender for amounts up to £10, so it would have to be an awfully small mortgage for you to be able to require the lender to take 20p pieces to settle it. £1 coins are legal tender to any amount, though, and in theory a lender would have to accept 100,000 of them to pay off a £100,000 mortgage.

    16. www.agwsociety.org
      19th May 2017

      Countries with extensive business and cultural ties may also accept each other s currencies as legal tender in limited amounts.

    17. Andy O
      22nd May 2017

      I went into my bank and handed over £2000 from the sale of a motorbike. the Bank refused to accept the cash to put into my own Bank account can they do this and why im stuck now with cash in the house instead of being safe in the Bank and i’m guessing if I get broke into they won’t accept any form of responsibility what can I do

    18. dee
      10th June 2017

      So my Bank of Ireland £5 note which was given to me all folded with my other change in the pub last night is NOT legal tender? I might as well blow my nose on it?

    19. dee
      10th June 2017

      So my Bank of Ireland £5 note given to me last night in the pub is NOT legal tender anywhere here in England?

      1. KnowledgeBank_Laura
        15th June 2017

        Hello, thanks for your question!
        No, Bank of Ireland notes are not legal tender anywhere in the UK. However that does not stop these notes circulating freely. Legal tender does not really apply to day to day transactions, so you should be able to either pay this note into your bank, or spend it in shops.
        I hope that answers your question.

    20. Vicki
      26th June 2017

      Do you have a right to refuse a scottish note as part of your change from any shop whilst in the UK?

      I work within retail & accept Scottish notes as payment for goods, but always thought they couldn’t then be handed back out as change to other customers.

      My partner received a scottish £5 note yesterday as part of his change which I thought wasn’t acceptable but when he went back into the shop to swop his Scottish note for an English note, a Scottish lady in the shop wasn’t best pleased stating that is was legal tender & the shop didnt have to change it for an English note.

      Clarification on this matter would be great

      1. KnowledgeBank_Laura
        24th July 2017

        Hello,
        Whilst they circulate freely and are generally accepted in their respective countries, neither Scottish nor Northern Ireland banknotes are actually legal tender anywhere in the UK. You may also like to be aware, however, that although current Bank of England notes are ‘legal tender’ in England and Wales, they are not in either Scotland or Northern Ireland.

        However, the term ‘legal tender’ does not of itself govern the acceptability of banknotes in financial transactions. Whether or not specific UK notes have legal tender status, their acceptability as a means of payment is essentially a matter for agreement between the parties concerned. An individual, or retailer, is, therefore, perfectly within their rights should they refuse to accept, for whatever reason, one of the UK banknotes, of whatever face value.

        Please see the this link on the Bank of England website for further information on the legal tender status of Scottish and Northern Irish banknotes: http://www.bankofengland.co.uk/banknotes/Pages/about/faqs.aspx#sandni

        I hope that answers your question, and thanks for visiting KnowledgeBank.

      2. Lee
        30th July 2017

        Here in Blackpool, Scottish notes and Northern Irish are widely seen and accepted. Down in southern England, you will encounter people refusing them!

    21. Rob knight
      10th July 2017

      Is it the responsibility of the customer or the shop to provide change when selling Something? If I don’t have the one pence I get customers trying to get the next value coin as it is ‘not their fault’. But I’m sure it is the responsibility of the customer to provide the correct change as shops do it as a gratuity for their custom. Thanks

    22. Claire van Maris
      18th July 2017

      Hi,

      I am from the Netherlands and will be spending my summer holiday in Scotland this year. As I often visit Great Britain I don’t always spend all the money I withdraw, but take it home with me for the next trip. As it happens I have a couple of old 5 pound notes here at home, and I was wondering if I can go to any bank in England or Scotland to get the notes exchanged for new ones?

      1. Lee
        30th July 2017

        You can pay them into an account with most banks. If they know you are from abroad then will most likely change as well!

    23. Ian McCreadie
      18th July 2017

      If “you can’t be sued for non-payment if you offer full payment of your debts in legal tender” then how can anyone refuse to accept legal tender and stay within the law?

      1. Lee
        30th July 2017

        Legal tender is for settlement of a debt only. A debt has not arisen if you have not received goods or services! Anyone can refuse to provide you goods or services.

      2. Mike Scott
        28th August 2017

        Because most transactions don’t involve incurring and then settling a debt. A shop can refuse legal tender in payment for a banana, because the banana and money change hands at the same time, so there is never a debt. But a restaurant (other than fast food where you pay before eating) can’t refuse legal tender, because you eat the food before you pay, so there is a debt.

    24. Michael
      23rd July 2017

      Your wrong cause English notes are accepted in Northern Ireland and Scotland

      1. Lee
        30th July 2017

        I was in Belgium yesterday where the shop accepted pound sterling and I paid in pound sterling! I even received my change in pound sterling. Currency or payment method accepted is a matter of mutual agreement. Only if a debt already exists is the issue of legal tender remotely relevant.

    25. Simon Redding
      26th July 2017

      We run a community project and when currency changes (e.g. the new pound coin), people always come in the day after they’re not legal tender and ask us if we can take them. Our bank will still accept them, so is there any legal reason why we can’t take them and pay them into the bank (i.e. is there a law that we can be prosecuted under for accepting currency that has been withdrawn)?

      Thanks…

    26. Alasdair Baxter
      8th September 2017

      What is the legal position with, say, car parks whose machines will not accept the new one pound coin? Can you be punished for parking there even if you tell the provider that you are willing to pay by another means, say, at their offices by cash, card or cheque?

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