What do I do with equity from a house sale between moves?

coblek

Hi,

After some help here!

We have a sale completing on our house (fingers crossed) in about a month. As a result we will have about £100K of equity winging its way into our bank account. Now this will be used as a deposit on our next house but as we are moving across the country, we may not be buying another property for another few months.

So...


a) what should we do with this large amount of money to guarantee its best and safest place to sit for up to six months and

b) do we face any tax implications if we don't re-invest it in a new property before the end of the tax year?

We'd love to hear some sound advice please!

Foxy-Stoat_3

Sling the maximum in a ISA per adult, £20K in premium bonds per adult, take out a Halifax account that pays you a £5 or £10 per month if you pay £1000+ a month, and find the highest interest rate easy access savings account you can find......not a financial adviser but that's what I would do with £100K if I had no mortgage to pay.

jamesml

Personally, I would max your ISA allowances but think carefully about what else you are planning on putting in this year anyway and the timing of how this would work.

Don't bother with Halifax account for this purpose - they changed the rules so you need 2 direct debits also set up (although you only need £750 going in). If you are happy to set up 2 direct debits you can cycle the same £750 through the accounts each month - no reason why you would do this just because you suddenly have £100k.

Other than that its personal preference as to premium bonds/savings accounts. Take note of the guarantee scheme and set out by the government and split your money between banks so that you are covered (can't remember what the limit is - don't forget to take into account other balances with the same bank).

If you really wanted to max out the interest look at regular savers, which often pay a higher rate of interest than normal savings accounts. You can normally open them with a couple of grand and then contribute a max monthly amount. Tbh we're taking about a fair amount of extra work and the returns probably won't be that great, but it depends if you are looking to max your interest or not.

If you aren't fussed about working too hard, I'd be tempted to buy some premium bonds and chuck the rest in the highest interest savings account you find which has instant access. Don't forget you might not win anything with premium bonds so depends how much you are fussed about earning any money from this!

getmore4less

ask the solicitor what rate they will give you on their client account might not be worth the hastle for a few months.

30k is the max PB pp

Yorkie1

Ensure that you have it split between two or more institutions so that you have no more than £85K in one banking institution (compensation rules).

Yorkie1

Also, have a look at the savings board as there's quite a lot of similar posts on there.

coblek

Thanks for your advice everyone. We are just concerned that we don't face some ridiculous tax bill from HMRC at some point!

Thanks!

ghosti

theres no reason why you would be taxed on your hard earned money that has been taxed already. considering that it is your primary residence that youre selling, which it sounds like it is.

i can only think of the highest rate savings account that pays interest monthly that you can find if you are needing access to the money soon. at least that way you get your interest (which will be taxed dont worry, lol) by the time your money is moved out as opposed to having to wait a year for it.

JimmyTheWig

coblek wrote: »

Thanks for your advice everyone. We are just concerned that we don't face some ridiculous tax bill from HMRC at some point!

You don't get taxed on money that you _have_, just on money that you earn.
So if you are higher rate taxpayers and you earn £1500 interest on this money then you will be taxed £600 of that.

Yes, that's a pretty big tax bill but it's still less (by definition) than the interest that you earn.
If you end up in a rubbish account and only earn £150 interest then you'll only pay £60 tax.