Proceeds of sale. What to do until I buy another property?

[BrightStar2021]

Hello mums netters,
Looking for some advice as I have absolutely no idea what to do. I am not sure if my thread should be here or in the finance section. But here goes.... I have a salary of 70k (specific tax implications may apply), just sold my property and have 90k to put towards a buying a new family home. We are currently looking and hoping to find something within 6 months or so, dependingon the market may take up to a year. My questions are, 1. will I pay tax on the 90k proceeds of sale of my property if I put it into the purchase of new property within a year? 2.Will i be taxed if it just sits in my current account? 3. if I put it in a savings account earning interest until I need it towards a deposit for new property, within a year will I taxed?
Thank you

Was it your only home? And your primary residence? If so, the £90k isn’t taxed as proceeds of the sale. As a higher rate tax payer, you have an allowance of £500 earned in interest each financial year. So depending on what you’ve earned so far this year, that’s until 5 April and then resets from 6 April. At current interest rates you could easily get more than this.

Have you used any of your ISA allowances? If you are able to, you can pay £20k into an ISA each tax year, and any interest on this is tax free.

Is the £90k shared with a partner? Do they have lower earnings? Basic rate tax payers can earn £1k in interest. You would also have their ISA allowances to use.

If you’re looking to use in 6 months or so, make sure you keep it in cash, don’t invest.

I'm not 100% sure but I believe you will only be taxed on any interest it makes above your "allowance". You will have a smaller allowance as you earn above £50k a year.

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

You shouldn't pay any tax on that £90k unless you have multiple properties and you need to pay capital gains tax on selling an additional property and making profit on it.

I am not a financial advisor so this is just my basic understanding.

@Wrestlingwrigglybaby this was the only property that I owned, which I rented out whilst I was living with my partner. He is not a high tax earner. The 90k is not shared with my partner. I do not have an isa, so will definitely look into this. Thank you for your advice

You get an ISA allowance in each tax year. Be quick put your full £20k ISA allowance in now then another £20k after April 6th. Put the rest in a high interest savings account.

If the property was rented, it wasn’t your primary residence so you may have some tax to pay unfortunately. Will depend on how long it was rented for and how long you lived in it. Call HMRC to confirm.

But otherwise, get the first £20k in an ISA asap, then another £20k in April. That’ll minimise the tax you’ll pay on the interest earned at least. Then keep track of the interest earned, in case you go over the £500 within the tax year (and I think you will), you’ll need to do a self assessment.

ZOPA have an instant access account paying something like 4.5 per cent and ISAs that you can make withdrawals from which might suit you.