How to invest c400k house deposit while renting.

Having sold my house a friend has offered to let me stay for 6 months plus while I wait for the right property to come up.

I am in for fortunate positions of having a large deposit for the next property and am aware that the 85k FSCS limit will cover this in a single place for the next 6 month.

However, what is the best easy access way to invest this?  Rates are good, but my salary is close to the 40% tax bracket and a bonus might leave all interest taxed at 40%.  I've not used CGT allowances in years.

Premium bonds? Instant access accounts?  1 or 2 months notice?  Shares are too risky, but would bond funds be a good idea?

How can I grow this without too much risk to the capital?


  • jimjames
    jimjames Forumite Posts: 17,159
    Part of the Furniture 10,000 Posts Photogenic Name Dropper
    You need to be clear what you want to do, investing will come with a risk to capital and for such a short time period is as likely to return less money as more. CGT won't be an issue with savings accounts but you can get at least 5.2% interest for instant access which is probably the best option in terms of flexibility.
    Remember the saying: if it looks too good to be true it almost certainly is.
  • Doctor_Who
    Doctor_Who Forumite Posts: 854
    Part of the Furniture 500 Posts Name Dropper Photogenic
    Rates are good, but my salary is close to the 40% tax bracket and a bonus might leave all interest taxed at 40%.  

    It would have to be a very large bonus to completely remove the personal savings allowance. If you are a higher rate tax payer then the PSA is £500 (it's £0 for additional rate tax payers). At 5.2% your c.£400K will give ~£10K of interest, so most may be taxed at 40%, but not all. If you don't already complete self assessment you will need to register if your savings interest is above £10K.

    'Compound interest is the eighth wonder of the world. He who understands it, earns it; he who doesn’t, pays it' - Albert Einstein.
  • Miser1964
    Miser1964 Forumite Posts: 207
    100 Posts First Anniversary Photogenic Name Dropper
    edited 12 September at 1:50PM
    £400k for 6 months as a possible higher rate tax payer, I'd max-out premium bonds to £50k (although you'll only get entered in 5 draws) and the balance of £350k in Santander Easy Access Saver Limited Edition paying 5% gross and accept a tiny risk of exceeding FSCS threshold.
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