October 16, 2012 – Can you pay with every kind of coin or banknote any amount in cash? That depends on where you live. Only recently Italy has decided that you can no longer execute cash payments over 1,000 Euro.
In the United Kingdom the definition is quite narrow: If you pay in legal tender the exact amount of a transaction, you cannot be sued for not having paid the debt.
However, coins cease to be legal tender at certain amounts. The Coinage Act of 1971 defines up to what limit coins are always legal tender. With 1 and 2 pence coins it is your right to pay up to 20 pence, with 5 and 10 pence the limit is £5, for 20 and 50 pence it is £10. £1 and £2 coins are legal tender without any restriction. So you can pay your new house you bought for £1 million with one million £1 coins. But you can do so with pennies only if the other party accepts 100 million pennies on a purely voluntarily basis.
Sometimes jolly persons try do pay large sums with pennies – and generally are refused as a certain Gary Southall who filled up a shopping trolley with pennies in order to pay a £1,300 fine he thought to be unfair.
You are always on the safe side, anyway, when settling debts with banknotes since they are legal tender without any restriction (in the United Kingdom). However, Bank of England banknotes are no legal tender in Scotland or Northern Ireland and viceversa. Though, practically there are no problems of using them outside of where the notes are considered to be legal tender. Keep in mind, however, that both parties need to agree on this.
The Bank of England explains legal tender especially as far as it considers banknotes …
… while the guidelines regarding coins are explained by The Royal Mint.
On Italy’s recent decision you can read an article here.
An online article discusses this question about legal tender in the UK.