Where to put £400k for 6 months

NatC222

We have a period of between 4-6 months between selling our house and buying our new one and will need to put the sale proceeds somewhere, ideally being protected and earning interest at the same time.  I have never had savings in my life and have no idea what kind of account to open that will tick these boxes.  I know you only have protection of funds up to £85k but would prefer not to have to open multiple accounts, but will do so if needed. 

When we have purchased our new house we will have circa £100k left to save.  Whilst it would be good to have access to these funds it would still be good to gain some interest on them.  

Can someone point me in the right direction please?  Thanks

Peter999_2

Hi.   Don't worry about the £85,000, when it is from the proceeds of a sale of your house you are protected up to £1 million for 6 months which should cover you.

Temporary high balances | Check your money is protected | FSCS

You could maybe put it into something like Marcus and get the 4.3% interest.

Online Savings Account | Marcus by Goldman Sachs®

Alexland

It depends on your circumstances but consider putting £20k each per tax year (starts 6th April) into an ISA wrapper, £50k each into tax free premium bonds (if you can be bothered for the short duration) and some of the excess into pensions possibly by extra contributions into your workplace pension for a while. For the rest yes savings accounts but consider your tax liability on any interest earned.
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nottsphil

Marcus? O yeah, I remember them; used to pay good interest.
I'd go for a notice account with Vanquis, a decent bank who have excellent rates. You can get higher with instant access, but the rates can quickly be lowered, unlike these:

Cold_comfort

If you both are taxpayers (because you both have earnings in the tax year above the personal allowance), instead of a savings account or 6 month bond, you could consider investing your cash in 0.625% Treasury Gilt 7/6/2025 (TG25). The advantage of this is that most of the return you get is considered to be a capital gain rather than interest, and for gilts is exempt from tax. Your return is guaranteed if you hold it until it matures on 7 June next year but you can also sell it early usually without too much effect on your return especially if it's very close to the maturity date.

Gilt prices fluctuate all the time but currently TG25 returns 4.41% (4.28% after 20% tax on the small element that is paid as income) whereas top 6-month savings bonds currently return about 4.7% (3.76% after 20% income tax). On £400,000, the difference over 6 months after tax is about £1,045.

You can buy gilts through a broker. Use one that doesn't charge an ongoing fee for an account or a % on gilt holdings in a trading account, eg Hargreaves Lansdown would only charge £11.95 for the gilt purchase and another £11.95 if you sell it early but nothing if you let it mature on 7 June. There may be other brokers who are cheaper.