Best place to temporarily store proceeds of a house sale

matstand

Hello.
We are selling our house, and after mortgage redemption will end up with about £600k. We aim to spend the money on a new house within 6 months, where is the best place to safely store it?

I pay tax at 40% and my wife pays 25% if that makes any difference. We would like like to make money out of it, but are very risk averse and will need access to it relatively quickly.
Any suggestions appreciated

grumiofoundation

Anywhere you like.

FSCS protection (normally 95k per institution) is temporarily extended up to a million for up to 12 months

https://www.fscs.org.uk/how-we-work/claims-process/temporary-high-balances/

If you end up needing more than 12 months NS and I (backed by treasury) offers protection above 85k.

Albermarle

I pay tax at 40% and my wife pays 25% if that makes any difference. We would like like to make money out of it, but are very risk averse and will need access to it relatively quickly.

If you need to access money quickly , then it should never be in a risk based investment anyway , whether you are risk averse or not . Investments are for the long term .

You can get around 0.5% in easy access savings accounts . £600K for 6 months at 0.5% = £1.5K interest .

As a higher rate taxpayer you will pay 40% tax on any interest earned over £500 .

Your wife as a basic rate taxpayer ( paying 20% not 25% ) can earn £1000 interest tax free. So you might want to split it into two accounts .

Alexland

matstand said:

I pay tax at 40%

Are you able to increase your pension contributions to avoid paying higher rate tax? It can also help with child benefit if you are a parent.

matstand

Thanks for all help.

I don't think that the pension contribution would help, as we need to buy a house sooner rather than later.

M

grumiofoundation

You can both put 50k each in premium bonds, any winnings are tax free. 

Mickey666

Yes, I was thinking max out in premium bonds and the rest in NS&I.  This is not really investment money it's the OPs home!

lhsecons

Mickey666 said:

Yes, I was thinking max out in premium bonds and the rest in NS&I.  This is not really investment money it's the OPs home!

That’s true, but why put the money in NS&I when it is completely safe in another savings account for the time period the OP is looking at. As suggested earlier you can get 0.5% in easy access accounts which is over 3 times what NS&I pays. I fully agree with the premium bond suggestion though. Iff you want to maximise the return you can increase it further by putting £20000 each in an instant access cash isa, assuming you haven’t already contributed to one this year.

ChilliBob

Definitely premium bonds to start with. The other 500k I guess easy access, use the best buy rates on here then look to Which or something for other ones a bit lower. 6 accounts, bingo.
Savings platforms have pants rates atm unless you want 1yr lockup. 

ChilliBob

Also, aside from PBs I'd avoid NS&I due to people having issues getting the cash out! (combined with poor rates there's little benefit if you only need to open 5-6 sccounts

lhsecons

You don’t need 5 or 6 accounts for that time period though. As stated earlier one is protected up to £1 million for 12 months.