Taxed on house sale proceeds?

boopybetty

Hi Peeps,
Please be kind, first post and not really sure what i'm doing! 
Basically, I am selling my house, going into rented accommodation for a few months (3-6 months) before buying a new home.  The money from the house sale (approx £300,000) will presumably need to go into a savings account.  I'm actually not fussed about it making loads of interest, but am concerned that it may be taxed, can i avoid this or is it just a fact of life and inevitable.  Help, please? xx

RobM99

As I understand it, no tax as it's your only residence. (Could be wrong though!)

boopybetty

But I wont have a residence, just a lump sum in a savings account?

masonic

£300k is not going to generate more than £1k in interest over 3 months, assuming you are a basic rate taxpayer without significant interest income then you would not pay tax on any of that. After 3 months, you'd may accrue enough interest to start paying tax. However, if you sold a home jointly owned with a partner you might still be ok for up to 6 months if you split the proceeds between you.

You won't be "taxed on house sale proceeds" as per thread title.

boopybetty

I wont be working once I've sold the house as i'm moving to a totally new area, and the house is solely in my name, sorry about the title, i'm clueless on money so thought that was the best description, ie being taxed on the proceeds of a house sale.

masonic

boopybetty said:

I wont be working once I've sold the house as i'm moving to a totally new area, and the house is solely in my name, sorry about the title, i'm clueless on money so thought that was the best description, ie being taxed on the proceeds of a house sale.

If your income for the tax year ends up being less than £17,500, then anything you earn in interest up to that £17,500 figure is tax free, with the £1,000 Personal Savings Allowance on top.

boopybetty

Sorry, totally confused, will i only get taxed on any interest the £300,000 makes, or will i get taxed on the £300,000 itself for the 3-6 months its sitting in a savings account?

masonic

boopybetty said:

Sorry, totally confused, will i only get taxed on any interest the £300,000 makes, or will i get taxed on the £300,000 itself for the 3-6 months its sitting in a savings account?

No, you never have to pay tax on money you deposit into a savings account. You pay income tax on your income earned above your allowances and nil rate bands.

boopybetty

Thank you!  Phew, you've put my mind at rest! x

dj240779

Tax situation aside, don't forget to split this money into different accounts. If a bank were to go bust, you are only guaranteed to get back up to £85,000.
If the money is from a house sale (which yours is) it's covered in full for the first 6 months, but after that it would be best to split around different companies.

Also, look out for companies in the same group. NatWest and Royal Bank of Scotland, for example, are counted as one company as they are in the same group. You want to split across different groups, NatWest, Halifax, Nationwide, etc. 

masonic

dj240779 said:

Tax situation aside, don't forget to split this money into different accounts. If a bank were to go bust, you are only guaranteed to get back up to £85,000.
If the money is from a house sale (which yours is) it's covered in full for the first 6 months, but after that it would be best to split around different companies.

Also, look out for companies in the same group. NatWest and Royal Bank of Scotland, for example, are counted as one company as they are in the same group. You want to split across different groups, NatWest, Halifax, Nationwide, etc. 

This is generally a good point, but at the moment the best easy access account is from NS&I, which is backed by HM Treasury, so in that case there is no need to split.