Large sum of money for a short period of time - How to maximise earnings

Cntyta

Hi, 

This is my first post, not so please be gentle. 
We are selling our house, we haven't found our next house yet, so going into rental temporarily.
We are going to have a very large amount of money for a period of 2-4 months (it all depends how long it takes us to find our next place and conveyancing!).
Our plan was to put the money into saving accounts (please feel free to propose any other options, we are completely lost!). My spouse doesn't work, and I'm a high tax earner.

Once we have the money in the bank, can we create a saving accounts only in my spouses name and move the money so I don't have to pay tax and we can use their tax allowance?
(Note: We have been together over 20 years and there are not issues of trust)

Could I please get some advice on how you would maximise this big sum of money for few months? 

Many thanks on advance!

Best regards,
C&C

born_again

https://www.moneysavingexpert.com/savings/savings-accounts-best-interest/

amanda1024

It might also be worth you opening an easy access ISA - you can put in £20k now and another £20k after 6th April, and that way you won’t pay tax in interest within the ISA.

VXman

I think your only options are instant access savings. Should be able get around 5%. If it's a large sum tax an ISA might be an issue as you may exceed your £1000 interest allowance. £20K now and 20K after April. Also it might be a good idea to get several accounts with different banks to cover your £85K government backed protection limit.

Instant savings 

https://www.money.co.uk/savings-accounts/instant-access-savings/pm-1?track=885130&inset-cookie-banner&utm_accountid=2259221394&utm_source=google&utm_medium=cpc&utm_term=instant access savings&utm_cmpid=15771777287&utm_adgid=128662365341&utm_tgtid=kwd-24196410&utm_mt=e&utm_adid=572684263392&utm_dvc=c&utm_ntwk=g&utm_plcmnt=&utm_locphysid=1006933&utm_locintid=&utm_feeditemid=&utm_devicemdl=&utm_plcmnttgt=&gclid=CjwKCAiA29auBhBxEiwAnKcSqkzBnNa5SIXlpGelW5CG_WAnkVBw62UU3RNcPijsCodKPPrHBNaxrxoCM5MQAvD_BwE#instant-and-easy-access-savings-accounts-deals

ISA (must be a flexible one)

https://www.moneysavingexpert.com/savings/best-cash-isa/

Cntyta

Many thanks for your comments. 
So it looks like our best option is
- 2x easy Access flexible ISA: (£40K each, 20K now and 20K after)
- The rest divide it in £85K chunks and put it in instant savings in spouse name

... and wait for the perfect house to come along while maximizing the interest :-)

aroominyork

You can get a decent return over the next two months with low tax by buying an individual gilt. TG24 matures on 22 April 2024. This link shows that you would get the equivalent of 5.079% (pro rata for two months). It pays 1% coupon and that is the only amount you pay tax on, so if you invested £1m for two months the coupon would be about £1m*1%*(2/12)=£1666, on which a 40% taxpayer would pay £666 tax assuming you have already used your personal savings allowance of £500. The capital gain from the current price of £99.33 (actually £99.3638 on ii.co.uk a moment ago) to £100 is tax free. nb the actual price you pay will be higher (clean/dirty pricing) because on 22 April you will receive a full six months coupon so, since you are only owning it for two months, the purchase price will include four months' worth of coupon. If you want a longer dated gilt, TN25 (coupon 0.25%) matures next January and you can sell it whenever you need the money.

Cntyta

aroominyork Many thanks, Im going to research it as I don't even know what a gilt is... it sounds very interesting!
How do you "manage" gilts? Do you need a broker? Im a bit lost

eskbanker

Cntyta said:

Many thanks for your comments. 
So it looks like our best option is
- 2x easy Access flexible ISA: (£40K each, 20K now and 20K after)
- The rest divide it in £85K chunks and put it in instant savings in spouse name

... and wait for the perfect house to come along while maximizing the interest :-)

If you're splitting into chunks to benefit from FSCS protection, then you might as well go for less than £85K, in order to leave headroom for interest, such as, say, £83K.

There is the FSCS temporary high balances provision, protecting up to £1m for up to six months, but if the money was being moved from a joint holding to a sole one that could disqualify it from THB eligibility.

NS&I is another option, with all amounts protected, but its simplicity is compromised by sub-optimal interest rates....

elkiedee

For ISAs, you can put £20K each into an ISA each tax year. 

There are limited access ISAs and savings accounts which pay more than instant access and allow a few withdrawals in the year. For example Nationwide offers a 1 year Triple Access ISA, currently 4.25% annual interest but variable, up to 3 withdrawals within 12 months with no penalty, Coventry offers Building Society offers both a Triple Access ISA and a Triple access savings account, quite good rates and and monthly interest - which I think you can get paid into a current account (or instant access savings - separately from capital withdrawals), towards rent, legal fees for conveyancing etc. Presumably then you can also take up to 3 withdrawals from each Triple Access account you or you wife hold, if you need to draw on it before completion. Obviously you'd need to check details so that you don't end up having to pay several months interest back to the bank - I think Nationwide might just change your account to a lower interest account rather than charging you, and the account has a fixed term.

Savings with fixed rates of interest mean locking your savings up for longer than you want to, definitely more than 2-4 months.

aroominyork

Cntyta said:

aroominyork Many thanks, Im going to research it as I don't even know what a gilt is... it sounds very interesting!
How do you "manage" gilts? Do you need a broker? Im a bit lost

A gilt is a loan to the UK government, see https://www.dmo.gov.uk/responsibilities/gilt-market/about-gilts/

You can buy them on many of the online investment platforms: Hargreaves Landsdown (the hyperlink is to that gilt), Interactive Investor etc. Do you have any investments which you hold through one of these platforms?

Cntyta

We don't have any investments... is there any platform in particular you would recommend?