Best Savings for £120,000

[Healingthehurt]

Looking for some advice for my dad. He has just sold his house and is due £120,000. He has moved in with us and not looking to buy again for a few years. He would like to put the money away in a high interest, low risk account. What is the best option for him to gain the most interest on his money and are there any tax implications we need to be aware of? Thank you

There may be tax implications depending on his income.

If his income is under £12570 then he has starting rate for savings of £5000 and personal savings allowance of £1000.
So if he had income of £10k, he could have savings interest of: (12570-10000)+6000=8570
After which the savings interest in the tax year would be taxable at 20%.
The above assumes he is in England.

ISA is tax free, so if tax is an issue £20k can be put into an ISA each tax year, assuming he is not already using his ISA allowance.

How IT literate he is may determine which savings accounts he uses.
Best buys tables can be found on various sites:
MoneySupermarket
SavingsGuru
Savings Champion
Money Saving Expert.

Consider how accessible the money needs to be, locking it away for a year may give a bit higher interest but it is then not accessible. Some accounts offer an interest rate as long as 3 or less withdrawals are made in the year, after which the interest rate drops.

Shop around and see what suits him. Building Societies can be useful if you have a branch nearby, if he needs an account which has a branch at which he can get help.

For that amount he'll either need to use NS&I or split it between a couple of different banks, to make sure it's all protected.

Check when the interest is actually paid. For example, some bonds pay interest monthly while others pay it all at maturity. That won't affect the total amount of income, so long as he is looking at AER to compare rates - but it will affect which tax year the income falls in.

For example, if he is expecting to have a bigger income in the current tax year and then be a non-taxpayer next year, it would be better to have the income paid in the next tax year.

Hello Healingthehurt,
He might consider investing into relatively short dated gilts (maybe spread over one - three years horizon depending on when he wants to retrieve the funds). They can be very tax efficient. I wrote up a summary here but please let me know if you have questions: howtosaveit.net - it's probably a 5 minute read. Good luck!