Which tenancy deposit scheme should you use, and what is the difference between custodial and insured?

In England, tenancy deposits must be protected through an authorised scheme, and Wales uses the same three approved providers even though Welsh tenancies are now occupation contracts. The practical choice is usually not the brand first, but whether you want the scheme to hold the money or you want to keep it and pay for insurance.

What are the three government-approved tenancy deposit schemes?

The three government-approved tenancy deposit schemes for England and Wales are the Deposit Protection Service, MyDeposits and the Tenancy Deposit Scheme; GOV.UK introduces the list by saying, “You can use any of the following schemes if your property is in England or Wales:”. DPS means the Deposit Protection Service, TDS means Tenancy Deposit Scheme, and both are government-backed deposit protection schemes rather than private alternatives outside the statutory system. Wales is not a separate provider list: a Welsh occupation-contract deposit must be protected in an authorised deposit scheme, and the usable market-facing list remains DPS, MyDeposits and TDS. Scotland is different: “There are 3 government-approved schemes in Scotland:” and they are Letting Protection Service Scotland, mydeposits Scotland and SafeDeposits Scotland. Northern Ireland is different again and has only two administrators, because nidirect says, “The two appointed scheme administrators are:”.

What is the difference between a custodial and an insured deposit scheme?

A custodial deposit scheme holds the tenant’s deposit money itself, while an insured deposit scheme lets the landlord keep the deposit and pays the scheme for insurance against non-repayment. The legal definition of custodial protection is that “amounts representing the deposits are then paid by the landlords into a designated account held by the scheme administrator,” so the landlord no longer holds the cash during the tenancy. The legal definition of insured protection is different: the landlord keeps the deposit, while “insurance is maintained by the scheme administrator in respect of failures by landlords to comply with such directions.” In ordinary landlord terms, custodial protection is the simpler cash-control model and insured protection is the cashflow model: TDS insured, DPS Insured and mydeposits insured are useful where a landlord wants to retain the money, but they add a paid insurance layer and more responsibility for repayment.

How much does a deposit protection scheme cost?

The law never lets a custodial scheme charge a landlord anything: a fee is only ever lawful under the insurance route, and Housing Act 2004 Schedule 10 says only that “The scheme may provide for landlords participating in the scheme to pay to the scheme administrator—” in the insurance-scheme paragraph. In practice, custodial deposit protection is normally free to the landlord because the scheme holds the money and funds itself another way; mydeposits says, “Custodial protection means we will hold the deposit for the duration of the tenancy for free,” and DPS advertises “FREE Custodial deposit protection, or Insured protection for a small fee”. Insured pricing is provider-specific rather than statutory: mydeposits currently states, “We've reduced our maximum price per deposit to just £22.00 per year (including VAT).” That makes the reliable rule simple: custodial should cost the landlord £0; insured deposit protection has a provider-set annual fee.

Which deposit scheme should you choose?

You should usually choose a free custodial scheme unless you have a clear reason to keep the deposit cash yourself, because the law only requires “an authorised scheme” and does not rank DPS, MyDeposits or TDS. GOV.UK says, “All TDP schemes offer you 2 options:”, so the more important decision is custodial or insured deposit protection rather than TDS versus DPS as a brand. Custodial protection reduces the risk of mixing deposit money with rent, repairs cash or personal funds; insured protection can suit landlords who deliberately manage cashflow and are willing to pay the fee and follow the scheme’s repayment rules. DPS claims market scale, saying it protects “more deposits in England and Wales than any other scheme,” but that is a provider claim rather than a statutory endorsement. Abodient can record which deposit scheme holds each tenancy’s deposit, which matters because the scheme name is the first thing a landlord or tenant needs when checking protection or arranging repayment.

How do you open an account with a deposit scheme?

You open an account directly with the deposit scheme you choose, because the Housing Act does not prescribe one central account-opening process and instead defines the scheme’s “initial requirements” as the requirements imposed by that authorised scheme. In practice, that means creating a landlord or member account with DPS, MyDeposits or TDS and then adding the tenancy and deposit details inside that provider’s system. DPS says that for a custodial account, “You'll receive an email with an activation link, which you must click on to finish creating your account.” MyDeposits describes the same basic first step more generally: “To get started you'll need to set up your member account.” If you are asking how to open a DPS account, the answer is therefore not to apply through GOV.UK; you register with DPS itself, activate the account, and then protect the deposit through the chosen custodial or insured product.

How do you check a deposit has been protected?

You check a tenancy deposit by searching or contacting the individual scheme, because there is no single official cross-scheme lookup covering DPS, MyDeposits and TDS together. GOV.UK tells tenants, “Contact a tenancy deposit scheme (TDP) if you're not sure whether your deposit has been protected,” which means checking each possible provider if the landlord has not given the prescribed information or the certificate is missing. DPS has its own deposit check tool and says, “Just enter your tenancy details into our deposit check tool and we'll search our database to see if we can find your deposit.” MyDeposits also searches its own records only; if it cannot find the deposit, it tells tenants, “you can contact the other two deposit protection schemes, TDS and DPS, to see if your deposit has been protected with them.” A tenant doing a tenancy deposit scheme check should therefore try the named scheme first, then the other two.

How does the scheme release the deposit at the end of the tenancy?

At the end of the tenancy, the scheme releases the deposit according to the landlord and tenant’s agreed split, and in England and Wales a custodial scheme must pay within 10 days once it receives notification of that agreement. Housing Act 2004 Schedule 10 states that where the scheme administrator is satisfied both sides have agreed, it “must arrange for the relevant amount to be paid, in accordance with the agreement, within the period of 10 days beginning with the date on which the notification is received by the scheme administrator.” In practical DPS deposit return terms, the tenant or landlord can start a repayment request and the other side confirms or disputes it; DPS explains that if the landlord accepts the tenant’s repayment request, “they'll confirm this and we'll repay the deposit as you've instructed.” If the split is disputed, the scheme’s dispute-resolution process decides what is released and to whom.

Who gets the interest on a protected deposit?

By default, the scheme, not the tenant, is legally entitled to keep interest on a custodial deposit in England and Wales; a provider paying interest out is a scheme policy, not a tenant’s automatic statutory right. Housing Act 2004 Schedule 10 says, “Subject to sub-paragraph (5), the scheme administrator may retain any interest accruing on such amounts.” That answers the hard version of the tenancy deposit interest question: if a platform or custodial deposit scheme keeps interest, that is not automatically unlawful merely because the money was originally the tenant’s deposit. Some providers choose to pay interest anyway; DPS says, “Once your Custodial deposit has been protected with us for more than 182 days, interest will become payable to you.” There is no separate legal duty requiring a scheme to disclose a full interest calculation method, so a landlord or tenant must check the provider’s own published terms and complaints route.

Which deposit schemes are approved in Scotland?

The three approved tenancy deposit schemes in Scotland are Letting Protection Service Scotland, mydeposits Scotland and SafeDeposits Scotland, because mygov.scot says, “There are 3 government-approved schemes in Scotland:”. Scotland is not covered by the England and Wales DPS, MyDeposits and TDS list for Scottish private tenancies; it has its own scheme approvals and its own repayment timing rules. The Scottish Government’s tenant-deposit guidance also says, “In most cases, they must protect your deposit in one of 3 tenancy deposit schemes.” SafeDeposits Scotland describes itself as “Scotland's leading government-approved tenancy deposit scheme, with 69% of the market,” while mydeposits Scotland and Letting Protection Service Scotland also describe themselves as government-authorised or government-approved Scottish schemes. If the property is in Scotland, use the Scottish scheme list, not the DPS tenancy deposit scheme list used for England and Wales.

Do tenancy deposit schemes report to HMRC?

No statute requires tenancy deposit schemes to report deposits to HMRC, and HMRC’s manual treats a scheme-held deposit as not income of the landlord’s property business while it is held. Finance Act 2011 Schedule 23 gives HMRC data-gathering powers and says, “Part 2 of this Schedule sets out who is a relevant data-holder,” but tenancy deposit scheme administrators are not a named category in that list. HMRC’s Property Income Manual gives the tax treatment more directly: “This amount is paid into a deposit protection scheme and so is not included in the income of Mr F’s property business for the 2019-20 tax year.” That does not mean a landlord can ignore deposit deductions later: if part of the deposit is retained for rent, damage or another taxable receipt, the tax question arises when that money becomes the landlord’s. A protected deposit simply is not landlord rental income while it remains scheme-held.

Last reviewed September 2026.

Sources

• GOV.UK, Deposit protection schemes and landlords — “You can use any of the following schemes if your property is in England or Wales:” Source
• mygov.scot, tenancy deposit protection for landlords — “There are 3 government-approved schemes in Scotland:” Source
• nidirect, tenancy deposit scheme information for tenants — “The two appointed scheme administrators are:” Source
• Housing Act 2004 Schedule 10 paragraph 1(2) — “amounts representing the deposits are then paid by the landlords into a designated account held by the scheme administrator,” Source
• Housing Act 2004 Schedule 10 paragraph 1(3) — “insurance is maintained by the scheme administrator in respect of failures by landlords to comply with such directions.” Source
• Housing Act 2004 Schedule 10 paragraph 5(5) — “The scheme may provide for landlords participating in the scheme to pay to the scheme administrator—” Source
• mydeposits, custodial protection — “Custodial protection means we will hold the deposit for the duration of the tenancy for free.” Source
• Deposit Protection Service — “FREE Custodial deposit protection, or Insured protection for a small fee” Source
• mydeposits, insured protection — “We've reduced our maximum price per deposit to just £22.00 per year (including VAT).” Source
• Housing Act 2004 section 213(1) — “Any tenancy deposit paid to a person in connection with an assured tenancy must, as from the time when it is received, be dealt with in accordance with an authorised scheme.” Source
• GOV.UK, deposit protection schemes and landlords — “All TDP schemes offer you 2 options:” Source
• Deposit Protection Service, deposit protection for landlords — “more deposits in England and Wales than any other scheme” Source
• Housing Act 2004 section 213(4) — “the initial requirements” Source
• Deposit Protection Service, creating a custodial scheme account — “You'll receive an email with an activation link, which you must click on to finish creating your account.” Source
• mydeposits, custodial protection — “To get started you'll need to set up your member account.” Source
• GOV.UK, if your landlord does not protect your deposit — “Contact a tenancy deposit scheme (TDP) if you're not sure whether your deposit has been protected.” Source
• Deposit Protection Service, is my deposit protected — “Just enter your tenancy details into our deposit check tool and we'll search our database to see if we can find your deposit.” Source
• mydeposits — “you can contact the other two deposit protection schemes, TDS and DPS, to see if your deposit has been protected with them.” Source
• Housing Act 2004 Schedule 10 paragraph 4(3) — “must arrange for the relevant amount to be paid, in accordance with the agreement, within the period of 10 days beginning with the date on which the notification is received by the scheme administrator.” Source
• Deposit Protection Service, the repayment process — “they'll confirm this and we'll repay the deposit as you've instructed.” Source
• Housing Act 2004 Schedule 10 paragraph 3(4) — “Subject to sub-paragraph (5), the scheme administrator may retain any interest accruing on such amounts.” Source
• Deposit Protection Service, paying interest on deposits — “Once your Custodial deposit has been protected with us for more than 182 days, interest will become payable to you.” Source
• mygov.scot, tenant deposits — “In most cases, they must protect your deposit in one of 3 tenancy deposit schemes.” Source
• SafeDeposits Scotland — “Scotland's leading government-approved tenancy deposit scheme, with 69% of the market” Source
• Finance Act 2011 Schedule 23 paragraph 1(2) — “Part 2 of this Schedule sets out who is a relevant data-holder.” Source
• HMRC Property Income Manual PIM1094 — “This amount is paid into a deposit protection scheme and so is not included in the income of Mr F’s property business for the 2019-20 tax year.” Source