short term savings

NJDragnil

Hi All, I'm looking for some advice...
I have just remortgaged my house and released some equity (£40k) to undertake some home improvements / renovations. This money is currently sitting in my current account. It is likely that the large majority of this money will not be spent until spring / summer next year and I am unsure as to the best thing to do with it in the meantime.
If i leave it in the current account will i be paying tax on it? Certainly it will not accrue anything in the way of interest! Some return on it would be great, but the money also needs to be accessible instantly or at short notice.
Any advice would be gratefully received

HappyMJ

NJDragnil wrote: »

Hi All, I'm looking for some advice...
I have just remortgaged my house and released some equity (£40k) to undertake some home improvements / renovations. This money is currently sitting in my current account. It is likely that the large majority of this money will not be spent until spring / summer next year and I am unsure as to the best thing to do with it in the meantime.
If i leave it in the current account will i be paying tax on it? Certainly it will not accrue anything in the way of interest! Some return on it would be great, but the money also needs to be accessible instantly or at short notice.
Any advice would be gratefully received

You can earn up to 6% interest in regular saver accounts. You can earn up to 5% in current accounts.

Yes you pay tax on it but the net rate of interest is higher than most Cash ISA's are paying right now so don't worry about the tax.

From next financial year tax on up to £1,000 of interest no longer applies.

Archi_Bald

Regular savings accounts do not normally allow withdrawal at short notice - and if they do, invariably this comes at the loss of interest.

Current accounts that pay interest seem ideal for the requirements of the OP. But they shouldn't expect to get rich from a few month's interest on £40K. A normal savings account e.g. with Tescos might be much simpler.

Eco_Miser

NJDragnil wrote: »

This money is currently sitting in my current account. It is likely that the large majority of this money will not be spent until spring / summer next year and I am unsure as to the best thing to do with it in the meantime.
If i leave it in the current account will i be paying tax on it? Certainly it will not accrue anything in the way of interest!

You won't be paying tax on the £40k. You will be paying tax on any interest you earn (until April, when £1000 savings allowance comes in).
As suggested, put the money in current accounts that pay interest.