Best use of 70K

WRCGooseF1

Hi all,
Would appreciate some advice / help on something.

When i sell my house i will have approx 70K coming my way and will not be buying a house straight away.

I would like to know (as someone with little knowledge on such things) where is best to place this money so i earn some interest whilst it's not being used, whilst being sympathetic to paying tax (Hopefully not paying any) and allows me to access it easily should i find a house to purchase.

Thank you for your help,

Dan 

eskbanker

https://www.moneysavingexpert.com/savings/savings-accounts-best-interest/#easyaccess
https://www.moneysavingexpert.com/savings/best-cash-isa/#topeasy

You'd need to work out how likely it is you'd be liable for income tax on the interest from a taxable account, which depends on your other income as well as duration, etc, so you could potentially use cash ISAs (up to £20K per tax year) if the rate makes sense.

EthicsGradient

Assuming you are a basic rate taxpayer with earnings above £18,570;

It's probably a good idea to put £20k of it in an easy access cash ISA now, and then another £20k in the same, or another easy access cash ISA, after the new tax year begins on April 6th. Best cash ISAs: up to 5.09% easy access, up to 5.01% fixed - MSE (moneysavingexpert.com) for good rates today (moneyfactscompare.com is also good for finding the best rates)

Have you earned much interest on any savings you already have in this tax year? If not, then you could put the £50k left in this tax year into a monthly interest account (it'll give you about £210 a month), and that won't hit your limit this year. And then there would be less to pay if you end up keeping it in the account for a long time next year.

WRCGooseF1

Hi,

I currently only have around £5K in savings which i intend to move to something like an easy access 'Chip' account on 4.84% as my rate currently is awful.

I am just thinking ahead when my house sells to have the money working for me until i buy another house.

I earn £41.5K a year. Thanks.

EthicsGradient

Yeah, I think what I wrote above stands - if you sell your house before April 5th, put £20k in an easy access cash ISA, put the rest in a easy access account (if the best you can find has the option of monthly payments, and it's more than a month to April 5th, choose that), and after April 6th put 20k (whether you had before or not) in an easy access ISA (unless you've found a new house so quickly that it looks like you'll buy within about 3 months, in which case there'd be no need to bother) . Depending on how long it takes to find a new property, you may end up paying a little tax on the interest, or not, but the important thing is to have it available for the property, and Premium Bonds are only really worth it for higher rate payers at the moment.

Andyjflet

£20k in a cash Isa 
£50k in Premium Bonds

darkcloudi

WRCGooseF1 said:

Hi,

I currently only have around £5K in savings which i intend to move to something like an easy access 'Chip' account on 4.84% as my rate currently is awful.

Why not put that 5k into a Cash ISA - as you allowed to pay up to 20k each year, you want to earn as much interest as you can and not lose much to the tax man. 

As you earn 41.5k then you can get up to £1000 interest - anything above that you will get taxed. If you became a high rate tax payer that drops to £500.

Janie2008

Definitely put the £5000 into an isa now in case the house doesn't sell until after April.  You want as much in tax free savings as possible.