Where to invest Proceeds of house for 6 months to a year

Not_Sure_What

This has probably been asked before, so apologies if I’m repeating the same post.

My wife and I currently have our house for sale, and it looks like we won’t have another one to move to in the near future, so we will probably rent until a suitable house comes onto the Market.

As a result, we will have the proceeds of the house sale to invest.

As this may be 6 months to a year, I am thinking of just opening an NS&I Savings Account and depositing all the money there as it doesn’t have a maximum guaranteed savings of 85,000 and also our ISAs are max’ed out.

We are both retired, and whilst I pay tax on my state and private pension, my wife doesn’t pay tax, as she hasn’t yet reached retirement age, so doesn’t have a state pension, only a small private one

So, we are not sure to open the NS&I account in joint names or in my wife’s name only to try to minimize Tax paid on Interest.

As an easy  example, say the value in savings is 500,000 and the interest rate is 3.00%, this would be 15,000 interest if we left it in for a year.

I know the limit is 1,000 interest before tax is paid, but I think it also can take into account any of the non-taxable allowance left over as well, which my wife would have.

So would we be best to use Joint names or just create it under her name?

 

Thanks

Albermarle

Are you aware of the starter savings rate?
You can earn up to £5K in interest in top of your personal allowance before the £1k allowance kicks in.
So if you subtract your wife’s taxable income from £18570, that is how much interest she can earn before paying tax on it.
Also there is a much higher FSCS Compensation limit than £85k, for short term high balances such as when in between house sale and purchase .

Eyeful

1. With the NS&I, you are lending money to the UK government, so your money should always be protected.
The price you pay is that their interest rates may not be the highest in the savings market.
https://www.nsandi.com/get-to-know-us/security/protect-your-money

2. Temporary High Balance Protection for 6 months:
https://www.fscs.org.uk/making-a-claim/claims-process/temporary-high-balances/

3. Best UK Savings Accounts
 https://moneyfactscompare.co.uk/savings-accounts/

4. Have you both opened your Cash ISA's yet. That would take up £40K.

xylophone

my wife doesn’t pay tax, as she hasn’t yet reached retirement age, so doesn’t have a state pension, only a small private one

See

https://www.gov.uk/apply-tax-free-interest-on-savings

Your spouse's ISA interest is tax free as is yours.

By way of example, let's suppose a person's only non savings/dividend income is a pension of  £3000 per tax year.

He can then set the remainder of his Personal Allowance (£9570) against savings interest.

He can then use the  starting rate for savings ( £5000) and the personal savings allowance (£1000).

Thus he can earn up to £15,750 in tax free interest.

Be aware that if a person earns more than £10,000 per annum in savings interest, he must register for self assessment. 

xylophone

Have you both opened your Cash ISA's yet. That would take up £40K.

OP says above

and also our ISAs are max’ed out.

OldScientist

Premium bonds allow up to £50k each with tax free winnings (current median 'interest rate' is about 3.3%, so equivalent to a rate of around 4% for a basic rate tax payer).

More complicated are individual low coupon gilts since most of their return is capital gains which is tax free for them.

Bigwheels1111

No, joint savings tax is split between you.
You say your wife’s pension is small. If the money was saved in her name.
Start With a total for the year of £18,570, take off her pension, whatever is left is the amount of interest she can receive tax free.
 My own example , 
I only get carers allowance, £4341.60
18,570 - 4341.60 =14,228.40 of tax free interest I can earn.

Self assessment is needed over 10k of interest, it is very simple.
Takes longer to register than file a return.
Other than name, address,ni number etc you wife would only need to fill out 2 boxes, Pension and untaxed interest.
Took me 10 minutes to file this year.

Split the cash into several pots to get the best rate, why settle for less just to save a little work.
81k per pot, keeps your money and interest safe.
There are enough easy access accounts at 5.0% to 4.3% to open via various banks and building societies to get 40 to 50% more interest, pay some tax and be better off than the 3% with next to no tax.
Chase bank
Atom bank
Chip
Sidekick
Coventry
Principality 
Kent reliance 
Have had accounts whit all but teachers.
Select rate order.

https://moneyfactscompare.co.uk/savings-accounts/easy-access-savings-accounts/?quick-links-first=false&product-favorites-first=false&sort-order=AER&sort-order-text=Rate

Dazed_and_C0nfused

Not_Sure_What said:

This has probably been asked before, so apologies if I’m repeating the same post.

My wife and I currently have our house for sale, and it looks like we won’t have another one to move to in the near future, so we will probably rent until a suitable house comes onto the Market.

As a result, we will have the proceeds of the house sale to invest.

As this may be 6 months to a year, I am thinking of just opening an NS&I Savings Account and depositing all the money there as it doesn’t have a maximum guaranteed savings of 85,000 and also our ISAs are max’ed out.

We are both retired, and whilst I pay tax on my state and private pension, my wife doesn’t pay tax, as she hasn’t yet reached retirement age, so doesn’t have a state pension, only a small private one

So, we are not sure to open the NS&I account in joint names or in my wife’s name only to try to minimize Tax paid on Interest.

As an easy  example, say the value in savings is 500,000 and the interest rate is 3.00%, this would be 15,000 interest if we left it in for a year.

I know the limit is 1,000 interest before tax is paid, but I think it also can take into account any of the non-taxable allowance left over as well, which my wife would have.

So would we be best to use Joint names or just create it under her name?

Thanks

As others have explained that is the very last thing your wife can use.

At the moment she won't be benefiting from it and needs to have enough income (this includes her taxable interest) to use her Personal Allowance and the savings starter rate band before the £1,000 savings nil rate band is even relevant to her.