Residual client balances under the SRA Accounts Rules: the £500 rule, the tracing steps and the register to keep

Money left in client account after a matter ends has to go back to the client promptly (SRA Accounts Rules 2.5). When the client cannot be found, a balance of £500 or less can go to a charity on the firm's own authority, and anything larger needs the SRA's written permission before it moves.

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Residual client balance tracing letter maker

Fill in the matter, the amount still held and who the client should contact. The letter asks a former client to claim the balance by the date you set, and says what happens if they do not.

Which letterLetter to the last known addressEmail to the last known addressWarning before applying to the SRA (balance over £500, client will not take the money) Your firm's name, address, phone and emailMarlow and Finch Solicitors, 12 Castle Street, Tonbridge TN9 1BH 01632 960000, accounts@marlowfinch.example Client's name The matter you acted in Year of the matter Balance held on that matterThe balance on this one matter. The £500 test is applied to each matter, not to the client's total. Who the client should contact Their phone number Their email address Date to reply byYour own choice of date. The rules set no period; record the date you gave.

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• Send it to the last address and the last email on the file, and record each step with its date. Keep the records for at least six years.
• A balance of £500 or less on one matter can go to a charity on the firm's own authority once reasonable steps to return it have failed. Over £500 needs the SRA's written authority first.
• Tracing costs cannot be taken out of a balance of £500 or less.
• Do not use this for money held for an estate where the executors are the client, or for a dissolved company. The charity route does not clear those balances.

The rule this rests on: SRA Accounts Rules 2.5 and 5.1(c). A draft to check and adapt, not legal advice. Regulated work: a supervising solicitor reviews every draft before it reaches a client, and the firm stays accountable for it (SRA Code 3.5; SRA warning notice on AI, 17 August 2026). The AI assistant drafts, checks and files; it does not advise.

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The two routes

The £500 test is per matter, not a cap on the total.

A worked ledger

A two-partner firm finds eight old balances at its reconciliation, none with a client it can reach.

Balances 1 to 6 add up to £959.75. Each is £500 or less on its own matter, so all six can go to charity without an application. Balances 7 and 8 add up to £2,470.00 and stay in client account until the SRA replies. The whole list is £3,429.75.

The steps

1. List them at every reconciliation. Rule 8.3 requires a client account reconciliation at least every five weeks, signed off by the COFA or a manager. Add a list of every matter with a balance and no reason left to hold it.
2. Try to return it. Write to the last address and email on the file. Rule 2.5 is the duty; the charity route is for when this fails.
3. Trace. For small balances the SRA suggests social media, Companies House or the Probate Registry, the Department for Work and Pensions' letter forwarding service, and free internet searches. Over £500 it expects the DWP service as a minimum in most cases, probably a newspaper advert if the sum justifies it, and sometimes a tracing agent.
4. Record each step with its date. Keep the records and the documents for at least six years.
5. Pay the charity and get a receipt. Ask for an indemnity against a later claim. The firm may choose a charity that gives none, and then pays the client itself if they come back.
6. Enter it in the central register. The SRA's statement names the entries: the rightful owner, the amount, the charity and its charity number, and the date of payment. Keep the receipts and any indemnity with it. The reporting accountant may ask for these.
7. Above £500, apply first. The SRA's form asks what was done to find the owner, and says thin information delays the decision.

A register that meets the statement

The matter and steps columns are ours; the statement requires the steps to be recorded but does not say where.

A tracing letter

We acted for you in [matter] in [year]. We still hold £[amount] in our client account that belongs to you. Please contact [name] on [number] or at [email] so that we can confirm your identity and send it to you. If we do not hear from you by [date], we will take further steps to find you, and if those fail the rules that govern solicitors allow us to pay the money to a charity. You would still be entitled to claim it.

Balances the charity route cannot clear

Dissolved companies: the SRA's guidance says money held for a dissolved company incorporated in England and Wales vests in the Crown as bona vacantia, so it cannot authorise the withdrawal and the money should be paid to the Treasury Solicitor.

Estates: where the firm acts for executors, or is the executor, the SRA will not grant an authority. Its example is £5,000 due to a beneficiary who cannot be traced: the executors are the client and the firm takes their instructions. The probate dates guide covers the deadlines on those files.

A client who refuses the money: the SRA treats its authority as a last resort. It normally suggests the firm writes to warn the client that it will apply and that the money will then go to charity.

What the SRA's own example shows

In the guidance a firm applies to pay 20 balances totalling £5,800 to charity, having searched online without success. (The guidance calls each balance "over £500", which that total does not bear out; we quote the figures as printed.) The SRA asks it to use the DWP service and place a local newspaper advert, which costs £120 from the firm's business account. Eight clients come forward and are paid. Authority is then given for the other 12.

Stopping them arising

The SRA says most residual balances arise because the client moved without telling the firm. Two habits help, and they are our suggestion, not an SRA rule: send the final bill and the balance on the same day, and agree at the start how any balance will be returned. The file-opening checklist is the place to add that line.

A supervising solicitor, and here the COFA, reviews and signs anything a tool drafts, including a register entry or an application. This page is general information, not legal advice.