Where to put £700k House Sale Money

Elemental_Wish

I have a house sale going through now which will give me circa £700k which I will eventually buy another house with. Where is the best safe place to put the money for what could be anything between 3 months to 2 years until I buy my next. 

Bigwheels1111

10 savings accounts. 6 month fixed, 9 month etc or easy access.

You will get taxed a fair bit, but say 80% of something is quite good.

so what tax bracket are you.

Married, if so are you one high earner and one low for eg. Split the money and let the low earner take the tax burdon if any.

You get upto 1 Million protection for a year, but payout could take an extended amount of time and effort..

People see 85k FSCS protection on an account but forget that it does not include and interest above 85k.

When I set up a five year fixed rate at 5%, I put 81k in.

Interest is paid away every year. £4050.00, so only £50 is at risk.

Clive_Woody

You might also want to stick some in premium bonds £50k/person for a bit of fun, but with easy access

Keezing

- If you want maximum safety and simplicity you could store it all in the NS&I Direct Saver, where funds are protected up to £2m. However it currently only pays 2.85% gross which is a lot less than the leading savings accounts.

- Alternatively you could split it between £50k in Premium Bonds, £20k in ISA and £85k in various different easy access savings accounts (see: https://www.moneysavingexpert.com/savings/savings-accounts-best-interest/)

- if it were me, I would probably opt to store most of it in a low expense Money Market Fund that currently pays around 5% gross. But I appreciate that might not be a popular option here due to the tiny amount of risk it introduces.

Albermarle

You get upto 1 Million protection for a year, but payout could take an extended amount of time and effort

I think the one year was only a special extension during Covid. It is back to 6 months AFAIK

Temporary high balances | Check your money is protected | FSCS

OP- If you have a wife/partner and a joint savings account , you are covered up to £170K, which could cut down the number of accounts you need.

Best savings accounts: 4.25% easy access or 6.1% fixed rates (moneysavingexpert.com)

Elemental_Wish

Thanks for the pointers everybody.

The money is actually half mine and half my brothers. We both already have the full £50k each in Premium Bonds so I guess it's time to start opening some accounts. I'm a higher tax payer so I might get my brother to open them up.

Albermarle

Elemental_Wish said:

Thanks for the pointers everybody.

The money is actually half mine and half my brothers. We both already have the full £50k each in Premium Bonds so I guess it's time to start opening some accounts. I'm a higher tax payer so I might get my brother to open them up.

You should put the full £20K into an easy access cash ISA, so at least that will be protected from tax.

lohr500

You could save the hassle of opening multiple a/c's from day one and put the full £700k into a single easy access a/c for the 1st six months. This using the £1M temporary high balance FSCS cover.

Leeds BS features in the MSE top pops list at 4.2% and allows a max of £1M.
Or go for Paragon at 4.25% but you would then need to split the cash as Paragon has a max of £500k.

If you or your brother don't need the cash as the six month window approaches then you can start splitting the lump sum down into smaller sub £85k amounts and spread that across multiple providers.

In the short term, managing one a/c has to be easier than managing nine!!

All of course assuming that there is, and will remain, harmony and trust between you and your brother.

In some ways, it may be better for you each to take your £350k share and manage your affairs independently.
I am not an expert, but could there be capital gains tax and tax avoidance issues if one of you deposits the full value and then passes half the lump sum and accrued interest to the other at some point in the future? 

someone

@Elemental_Wish Was the house that is been sold both you and your brothers main residence? If it wasn't and none of the other relevant life events apply then FSCS temporary high balance would not protect the money.

@Keezing first two ideas are generally the most widely accepted.

Certain life events could have caused a temporary high balance in your bank account, including:

• Real estate transactions (property purchase, sale proceeds, equity release - relating to your main residence only. This does not have to be a UK property but must relate to your main residence).
• Benefits payable under an insurance policy.
• Personal injury compensation (unlimited amount).
• Disability or incapacity (state benefits).
• Claim for compensation for wrongful conviction.
• Claim for compensation for unfair dismissal.
• Redundancy (voluntary or compulsory).
• Marriage or civil partnership.
• Divorce or dissolution of their civil partnership.
• Benefits payable on retirement.
• Benefits payable on death.
• A claim for compensation in respect of a person's death.
• Inheritance.
• Proceeds of a deceased's estate held by their personal representative.

boingy

NS&I normal savings rate is increasing to 3.4% from 13th July. Not a world beating rate but they have the advantage of not being limited by the 85k FSCS cover so you could safely put the whole lot into one account. Lower interest but less admin than opening 8 or 9 accounts. You should definitely use up each of your ISA allowances too, if you haven't already.

RobM99

Albermarle said:

Elemental_Wish said:

Thanks for the pointers everybody.

The money is actually half mine and half my brothers. We both already have the full £50k each in Premium Bonds so I guess it's time to start opening some accounts. I'm a higher tax payer so I might get my brother to open them up.

You should put the full £20K into an easy access cash ISA, so at least that will be protected from tax.

Agreed- quick, easy, and 4.5% or so is easy to get, that's £900 a year for doing almost nothing!