Tax on bank account interest if not working.

martynh99

We are about to complete on our house sale and won't be purchasing in the foreseeable future. 
The equity is a considerable amount so will be split across a couple of bank accounts to ensure the £85k protection but with interest rates on the up, this then raises a question about tax on interest earnt. 

1 of us is a 40% tax payer, the other doesn't work - does this mean the non-earner can take advantage of personal tax allowance (£12570) + starting savings rate (£5000) + personal savings allowance (£1000) and earn upto £18570 of savings interest per year without paying tax on it whereas the 40% tax payer would be wollaped on any interest over £500 ? 

molerat

Yes ................................

martynh99

Tax on savings when no other income ? — MoneySavingExpert Forum
found another thread on here that had the answers already, if a mod would like to close this thread or merge please. 
Now to go find the best savings accounts to fit

SiliconChip

You don't have to rush to find multiple accounts to split the money across as you'll have Temporary High Balance protection up to £1 million for up to 6 months.

martynh99

Thanks @SiliconChip , I wasn't aware of that, it is likely we'll need more than 6 months but at least we can put the proceeds into the highest interest paying account for the 6 months before having to split it out. 

Under the temporary high balance rules, deposits over £85,000 are protected for up to six months from when the amount was first credited. The types of ‘event’ that are covered under the scheme include: Real estate transactions (property purchase, sale proceeds, equity release) relating to a depositor’s main or only residence