Where to put money from house sale for a year or so?

[Chocolatecupcake12]

Currently live separately to my partner. We both own our houses with mortgages
I'm planning on selling my house, then moving in with them. See how we get on living together and then we'll either be selling the remaining house and buying together, or I'll be buying a house nearby on my own.
I will need to put the money from the sale of the property somewhere for maybe 1 year ish. I think I will have around £120-£160k once house sold and all fees etc have been paid.
If I get it in this tax year I can put £20k into cash ISA and another £12k in April. Premium bonds, I could put £50k. That's £82k of the money in tax efficient savings. I'm a basic rate tax payer, so I can earn upto £1000 in interest before I get tax code adjusted, so I'm trying to find out where else I can put the money where I can avoid being taxed. I will have another £40k-£80k to put somewhere.
I don't want to put anything in stocks and shares because the money will need to be used for onwards purchase within a year or 2. Where else could I put the money in the mean time?

In a money market fund

Chase had the best interest rate a few months ago. You can bank £120k securely and I’m earning 4.6% interest.

I Would open two high interest accounts rather than Premium Bonds.

nsi fixed rate bonds

The problem with normal savings is the tax side of things. £50k at 4.6% interest would be £2297 in interest in one year and personal savings allowance is £1000. So I'm trying my best to get things into tax efficient accounts wherever possible. I don't really want my tax code being adjusted in the following year because it'll look like I'm earning less money when I apply for the next mortgage if that makes sense.
I might need to put some of the money into normal savings account but trying to exhaust all tax efficient accounts first if possible

They'll take your gross income for mortgage purposes via your P60 not your tax code so it won't affect your mortgage application.

Agree with Musicaltheatremum RE the mortgage, so no worries there.

You've done the best you can to shelter from paying tax on the interest so your best options with the rest are (1) a high interest savings account and just pay the tax, or (2) premium bonds for £50k of it - but the return likely won't beat option 1 on average (see MSE website - they have a comparison calculator). We had the same a couple of years ago - main thing was to make sure HMRC knew it was a one-off so they don't adjust your tax code in the next year too

Sorry, totally missed the bit about your tax allowance.

You’ve already mentioned the obvious tax efficient options - ISA and premium bonds. As a basic rate taxpayer you may well find that a high interest account pays better than some of the other options (eg premium bonds, unless you are lucky) even after deducting 20% tax on the excess interest above your savings allowance.

Useful to know it shouldn't mess up anything on the mortgage affordability side of things if my tax code changes to pay savings
So if I put £50k in premium bonds
£20k into cash Isa this year and £12k next year when the yearly cash Isa allowance has reduced
Then the remaining £38k-£78k into normal high rate savings (getting £1700-£3500 ish), so once personal allowance of £1000 deducted, pay £140-£500 ish of that interest via tax code change on my normal wages over the course of the year once hmrc update my tax code at the end of the year

I suppose I could put £8k into global etf on stocks and shares isa next year to use the full £20k Isa combined allowance and take the risk I might not make a profit and need to leave the £8k in there for longer and not use it towards the next house considering it's not a big chunk of the money I'm putting away and reduce the taxable savings to £30K - £70k instead

exhaust ISA put the rest in fixed bond you know exactly how much interest you will earn and make a direct payment to HMRC in advance
banks are very slow sending tax info to HMRC so you wouldn’t get a tax bill till 10 months after then end of the tax year anyway

Stupid question but how do I pay it to hmrc in advance to hmrc so they don't change my tax code, do I have to do full self assessment form or is there just one I can fill in for savings interest only. My job is PAYE normal monthly pay that doesn't really fluctuate normally

Can I just ask why you're selling your house before you figure out if you're happy to live with your DP? If you're giving yourself a year, why not rent your existing house for that time and then, if the living together doesn't suit, you can either go back to living there, or if it's not conveniently located, make a move then?

Because I need to move house anyway, so I wouldn't return to my house if we decide not to buy a house together, I would be looking to buy a different house anyway
I also don't want to rent out my house, there's a lot of expense, regulation and I would need to kick out tenants when I wanted to sell it to release funds to buy the next house, with or without my partner. It would also push me into higher tax band. Capital gains potentially come into play too after so long
So if I sell the house now, move into their house. We can then decide whether we're compatible when it comes to living in the same house. If all goes well, they will sell their house too, making it easier not selling 2 houses at the same time and we'll buy a different house together. If we get on each other nerves once living together, then I can buy my next property on my own and I will be in a good position to buy because no-one will be waiting on my house to sell to complete a chain

Have a look into short term gilts. Martin Lewis mentioned them on one of his recent podcasts.

Thank you, will have a look at the Martin Lewis stuff on that, I don't know much about gilts

Unless you need all the money for your next purchase, you could consider putting some of it into a general investment account, to be drip fed into S&S ISAs over the next few years as, over time the return should beat cash savings, you just need to avoiding having to withdraw the money when the markets are low and of course, even over a year or two, the return could be higher than cash and you could withdraw it to use towards a deposit, or leave it invested.

Or if you feel you might be able live without it until you are 57, you could put up to your annual salary in total into a pension.

However, if you need all the money, I'd go with as much as possible in a cash ISA, premium bonds, and the rest in standard savings accounts with the best rate possible.

Stocks and shares ISA's and GIA's can go down as well as up, so are intended for long term investment. If you do go with one then make sure it is well diversified. I would also consider hanging onto the house for a while, so that if living together doesn't work well early on, you at least have somewhere to move out to straight away. Then if it is going well, you at least don't have the money in your hands for as long before you buy together.

I was planning on putting as much as I can into cash isa, maybe £8k next year into s&s iss global etf as £8k won't make or break the next house purchase, so I can leave it in there if it makes a loss that year. Don't fancy a general investment account because it's not shielding me from tax and is risky in the short term.
If the shit really hit the fan when we were living together and if already sold the house, I could rent temporarily if absolutely necessary while buying the next house.
It's not a new relationship so I'm fairly confident we'll not be falling out once I move in.