What is legal tender?

Many people are confused about what legal tender means. It’s actually about settling debts rather than how you can pay for things.
This page was last updated on 30 January 2020
English banknotes aren’t legal tender in Scotland. Scottish notes aren’t legal tender in England or Scotland. Debit cards, cheques and contactless aren’t legal tender anywhere. Confused? Let us help you out.

What does legal tender mean?

You might have heard someone in a shop say: “But it’s legal tender!”. Most people think it means the shop has to accept the payment form. But that’s not the case.  

A shop owner can choose what payment they accept. If you want to pay for a pack of gum with a £50 note, it’s perfectly legal to turn you down. Likewise for all other banknotes, it’s a matter of discretion. If your local corner shop decided to only accept payments in Pokémon cards that would be within their right too. But they’d probably lose customers. 

Legal tender has a narrow technical meaning which has no use in everyday life. It means that if you offer to fully pay off a debt to someone in legal tender, they can’t sue you for failing to repay.

Scottish and Northern Ireland banknotes

So what’s actually classed as legal tender?

What’s classed as legal tender varies throughout the UK. In England and Wales, it’s Royal Mint coins and Bank of England notes. In Scotland and Northern Ireland it’s only Royal Mint coins and not banknotes.

There are also some restrictions when using small coins. For example, 1p and 2p coins only count as legal tender for any amount up to 20p.

Many common and safe payment methods such as cheques, debit cards and contactless aren’t legal tender. But again, it makes no difference in everyday life.

When do Bank of England notes stop being legal tender?

Our notes stop being legal tender when we withdraw them. We usually give several months’ notice of the date we will withdraw a note.

Before this happens, we design a new banknote and start issuing it. Our notes always keep their face value. If your local bank, building society or post office won’t accept them, then you can exchange them with us.

A withdrawn One Pound banknote

See our banknotes section for information on exchanging withdrawn banknotes, Scottish and Northern Ireland banknotes and other topics.

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