Proceeds from house sale

tightasafish

Hi all, as a 60 something couple who are just weeks away from selling our current home, and are in the fortunate position of being able to live temporarily with family whilst we look for our perfect downsized property, we will have around £200k to invest in the short term.

We have read about splitting anything above £120k and will take that on board.

We are not really familiar with how ISAs work but am I right in thinking that you can only put a maximum of £20k in per year, and that everyone has a tax free allowance of £1000 interest per year anyway?

Thanks in advance for any advice.

OldScientist

Yes, you can only put £20k each in an ISA each tax year

Yes, if you are both basic rate tax payers then you each have a £1k tax free interest allowance. However, if one of you has earnings below about £17k, then you might have a greater allowance for interest - e.g., see https://www.gov.uk/apply-tax-free-interest-on-savings

Obviously, the amount of interest you earn will depend on how long it takes to find your new property - at a 4% interest rate, you will get £8k over a year - i.e., a shade under £700 per month - in other words, if it takes 3 months to buy a new house you will have received about £2k in interest, 4 months £2.8k, etc..

Baldytyke88

Put £50k in Premium Bonds?

https://www.nsandi.com/products/premium-bonds

Dazed_and_C0nfused

https://forums.moneysavingexpert.com/discussion/6664831/proceeds-from-house-sale

There are no actual allowances specifically for interest but up to £6,000 (per person) can be taxed at 0%. And there is the Personal Allowance each person is likely to have.

But it all depends on what other taxable income you have (and the types of income). So the £1,000 you are referring to (interest taxed at 0%) may be of no relevance whatsoever.

Albermarle

https://forums.moneysavingexpert.com/discussion/6664831/proceeds-from-house-sale

Presume you mean you want to save the £200K, not invest it ? ( there is a big difference between the two)

In which case have a read of this ;

Savings | MoneySavingExpert

csgohan4

There is no such thing as investing in short term I'm afraid, without risk. Seeing the market these last few months, it's been a roller coaster ride, would you be happy if that money was down 10-20% in one day?

Have a look at Microsoft as a good example

As above max out premium bonds, savings accounts or cash ISA

eskbanker

https://forums.moneysavingexpert.com/discussion/comment/81969334#Comment_81969334

Individual shares are always going to be the most volatile of investments, and collective investments would be a more realistic comparator - I still don't think it's been a particularly remarkable few months, relative to actual crashes or even corrections, in that I don't believe that the major markets moved more than 10% from peak to trough (and some back to peak again), and no more than 1 or 2% on any trading day.

Having said that, I'm not recommending that OP invests, and it's pretty clear that that's not what they meant anyway…

csgohan4

https://forums.moneysavingexpert.com/discussion/comment/81969382#Comment_81969382

good to see you on here again after all these years. Indeed it depends on the OP's risk appetite. Even VRWP I wouldn't invest short term, as in <5 years

eskbanker

https://forums.moneysavingexpert.com/discussion/comment/81969402#Comment_81969402

When you say 'even VWRP', 100% equities is always going to be high risk, even though funds will be less volatile than individual shares, but of course investment risk is a scale so there are plenty of choices further down, through multi-asset funds and fixed income products to short term money market funds that are almost cashlike. However, as above, this is likely to be academic for OP!

LHW99

We have read about splitting anything above £120k and will take that on board.

Bear in mind that temporary high balances (eg from house sales) are protected for 6 months up to £1.4m

https://www.fscs.org.uk/making-a-claim/claims-process/temporary-high-balances/