Using interest from house capital to pay rent

snow_flake01

Hello,
Hope I'm in the right place for this question - seemed like the best board to start on but please advise if I should be somewhere else!
Due to circumstances beyond our control (husband's illness), we may be selling our house in the not too distant future. As we don't know how long recovery will take, I don't know whether buying a place that might not suit us in a year's time is a good plan so was thinking of renting for a while. My question is, if we did rent 1) can anyone recommend a good acount to put the capital from the house into that pays monthly interest and 2) what, if any, are the tax implcations of using the interest to pay the rent? It is likely to be for around 6 months if we do decide to go down this route.
Many thanks!

F_T_Buyer

1. ICICI @ 5.65%? Icelandic Bank @ 5.7%

Also have seperate accounts so you are covered in the very unlikely case of these banks going tits up.

2. You will pay tax at source on the interest, at 20% (if basic rate taxpayer), then just pay rent with the remainder.

snow_flake01

Thanks. Dumb question, when you say 'at source' do you mean tax will be removed from the account by the bank?

Guy_Montag

snow_flake01 wrote:

Thanks. Dumb question, when you say 'at source' do you mean tax will be removed from the account by the bank?

Yes, exactly as you currently do. Though if you drop below the tax threshold, you may not have to pay any tax.

Don't forget to use up your ISAs, if you can get 3k each in before April 5th & another 3k each in after. (ISAs are tax free)

Post this question on one of the investment boards for some in depth advice.