Short term savings

lucycbell · 26 December 2022 at 1:30PM

I am looking for some ideas of what is best to do with proceeds from our flat sale (my husband and I), which we hope to use as a deposit for another property in around 6 months time. We'd prefer to split the money between a couple of banks for protection, but cannot take advantage of fixed term accounts as I can only find ones which are 1-year minimum. Would it be better to get separate ISAs for the money as that's tax free?

PeskyBlunder · 26 December 2022 at 1:36PM

There are some 6-month fixed ones listed here:-

https://moneyfacts.co.uk/savings-accounts/up-to-1-year-fixed-rate-bonds/?quick-links-first=false

Bridlington1 · 26 December 2022 at 2:59PM

I'd start off by plonking the money in the highest paying easy access account you can find (Coventry will be paying 3.25% from 6th January), then decide what to do with it from there. There's a whole host of regular savers that pay north of 3.25% which allow penalty-free early closure or easy access so if you want to spread the money about, these would be a good option.

As for ISAs, the top paying easy access ISA is Virgin Money's exclusive cash ISA at 3% (though you need to have a VM current account to open one), followed by Nationwide's Triple Access ISA at 2.5%. Whether an ISA would be right for you will depend on your tax situation, see https://www.moneysavingexpert.com/savings/best-cash-isa/#needtoknows

A few useful numbers (these numbers are based on non-ISA accounts compared with keeping the money in the Virgin Money account mentioned above, with numbers in brackets being compared to the Nationwide account). For these figures I've not taken into account the personal savings allowance:

If you are a basic rate (20%) taxpayer a non-ISA account paying more than 3.75% (3.125%) will be better post tax.

If you are a higher rate (40%) taxpayer a non-ISA account paying more than 5% (4.1666666666....%) will be better post tax.
If you are an additional rate (45%) taxpayer a non-ISA account paying more than 5.45454545....% (4.5454545454....%) will be better post tax.

grumbler · 26 December 2022 at 4:17PM

lucycbell said:

Would it be better to get separate ISAs for the money as that's tax free?

First, your annual ISA limit is just £20K,

Secondly, you can make at least £1K interest tax-free each in normal accounts.

RobM99 · 26 December 2022 at 4:29PM

90 day notice account?

eskbanker · 26 December 2022 at 4:43PM

lucycbell said:

I am looking for some ideas of what is best to do with proceeds from our flat sale (my husband and I), which we hope to use as a deposit for another property in around 6 months time. We'd prefer to split the money between a couple of banks for protection...

You don't say how much you're talking about but you may not need to split it for protection if it's proceeds from selling your home, thanks to the FSCS temporary high balances provision that protects up to £1m for up to six months:

https://www.fscs.org.uk/making-a-claim/claims-process/temporary-high-balances/