£60K - where to put it?

fireuptheband

Hopefully, we may be in a position to receive £60K.

We sold 50% of old property to my sister and she wants to now by the other half.

Would we be liable to capital gains? We have no mortgage on our half, so would just receive the cash.

Was also wondering where best to keep it. We have a mortgage on our current property, but are unable to make overpayments for the 2 year term (18 months left).
Would like to keep it (60K) somewhere for these 18 months and then pay off some of the new mortgage, which is at 4.69%.

Any help, greatly appreciated. :beer:

Ali120604

You are not liable to pay capital gains tax on your prime residence so providing you have no other properties you don't pay tax.

Where to put it depends on your views on risk. You could safely put it in a high interest account, perhaps an internet based one with interest penalties if you dont give notice to withdraw funds - you'll earn a better rate of interest.

You could consider premium bonds if you are already a high rate tax payer. There are discussions on this thread re premium bonds and people have mixed views but I think they are a good idea. Note, the cap is £30k per person.

fireuptheband

Thanks Ali.

We have another property, so I think we would be liable to CGT.

I was thinking of a high interest internet account (Icesave), which would pay more than the mortgage.

Already got premium bonds, but have nowhere near the limit, so that could an option.

Chrismaths

We have another property, so I think we would be liable to CGT

Doesn't matter - it depends on where you lived. Read here
for more info.

Premium bonds are not investments, no matter what that beardy prat Sugar says.

I was thinking of a high interest internet account (Icesave), which would pay more than the mortgage.

Only if you don't pay tax. After basic rate tax you will get 4.2%, If you pay higher rate tax you will receive 3.15% (coincidentally the same as Premium bonds on average...)

farhad1965

I recommend you put the £60k in an account with ICESAVE.

They pay 5.2% gross interest at the moment. I have put aside £6k so far in the past month and found the account opening process very easy and very speedy. As I opened it in my wife's name and she does not have any income we have requested that they pay gross interest.

Market_Oracle

You could split the £60k into two £30K , 1 or 2 year fixed rate bonds, there are several out there ranging from 5.8% to 6%

fireuptheband

Chrismaths wrote:

Doesn't matter - it depends on where you lived. Read here
for more info.

Premium bonds are not investments, no matter what that beardy prat Sugar says.



Only if you don't pay tax. After basic rate tax you will get 4.2%, If you pay higher rate tax you will receive 3.15% (coincidentally the same as Premium bonds on average...)

We're both on higher rate tax, so premium bonds could be a worthwhile option - especially if we won the big one!
Maybe split it and put £30K in each.

fireuptheband

Market_Oracle wrote:

You could split the £60k into two £30K , 1 or 2 year fixed rate bonds, there are several out there ranging from 5.8% to 6%

Thanks Market Oracle.
How do they work and who does them?

dunstonh

We're both on higher rate tax, so premium bonds could be a worthwhile option - especially if we won the big one!
Maybe split it and put £30K in each.

Im a higher rate taxpayer and wouldnt go near Premium Bonds. The thought of averaging around 3% a year tax free doesnt appeal at all.

fireuptheband

Thanks dunston.

What would you advise as an alternative?

Market_Oracle

fireuptheband wrote:

Thanks Market Oracle.
How do they work and who does them?

Heres some you could look at, the reason to split your 60k is to protect the capital.

Coventry B/S 5.8% fixed to 31.01.08
http://www.coventrybuildingsociety.co.uk/savings/productfeatures.aspx?ProdCode=CEB12

Derbyshire 1 year 5.6% Fixed Year Bond
http://www.thederbyshire.co.uk/savings_and_investments/longer_term_investments/1_year_fixed_rate_bond.html

Ruffler bank 2 year 6.07%
http://www.rufflerbank.co.uk/savings/fixed_rate_bonds.php

How they work ? Similar to savings accounts, just that the interest rate is fixed and you get a penalty if you try to withdrew before they mature.