Where can I put a substantial sum of money?

[gemmiegoatlegs]

We are finally selling our house and will be completing next week. This will free up a fairly big chunk of money which I want to tuck away for the deposit for next time we buy. We are going to be renting for the next couple of years and don't need the house sale money to live off.
I want to squirrel the money away in different places (not putting all my eggs in one basket so to speak)
So does anyone know how much money I can gift to my children before it is declared as income?
How much can dh and I put into an ISA each?
Which accounts have the best interest rates at the moment?
Are premium bonds a worthwhile investment?
Whether HMRC will count this money as income when working out our tax credits (we don't get a lot anyway)

I kind of know what he means. It just doesn't feel as safe somehow!

When we sold and rented it was only for c six months so not quite the same, but I looked for the best rate on Guardian money (I think they use money supermarket). It was just before Northern Rock went tits up so I didn't spread it in £35k bundles. Lucky escape ;).

I don't work so we put the money in an account in my name so we pay less tax on the proceeds. Never thought of putting an extra dollop in boys' names but for six months prob not worth it.

I would say you probably want one £35k bundle accessible at less than a month's notice in case when you do decide to buy you find a fantastic property and need to put down a deposit sharpish to secure it. I know that sounds unlikely atm but things may be better in two or three years.

Icesave? I think they offer 6.3% on an account that you can access at any time, and 7% on a fixed term one.

6.5

we did the same

have been renting for 18 months after selling up and relocating

i think it's been in egg

we thought about putting it on deposit but decided we wanted to be able to get at it quickly if the right house cam along

Even after Northern Rock Noddy?

Just double checked and Kaupthing are safe

Look on moneysaving expert - has a link to banks protected by the FSA 35k thing. Remember to put less than 35k in though because once you earn interest you are over 35k already. The Icelandic banks are supposedly not strong (in same way B&B is a bit wobbly) but are protected by FSA. It also shows which banks are linked.

Interest you earn from your accounts does need to be declared for tax credits

This site is good imo, hope it helps:

www.moneyfacts.co.uk/savings/bestbuys/default.aspx

thanks all...I kind of like the idea about having an obscure Icelandic bank...it makes me feel all global

I'm fairly sure interest earned from ISA's doesn't need to be declared to the WFTC people though, so this should be taken into consideration.

Interesting about Kaupthing bank though.

Some of the better deals are only available through financial advisers or you get better terms. We often put our clients with a company called Transact which is exclusive to IFAs. You can each have an ISA up to the maximum of £7200 each plus a General Investment Account with what's left over and it's all there in the same place. The cash rate is about 5% but you could have some in cash , some in funds. A good choice is the Arch Cru portfolio fund which goes for 3-4% above the base rate and isn't correlated with the stock market. You can also get money out quickly if you need to. There's quite a hefty intial charge unless you go via an IFA though.

The websites are www.transact-online.co.uk and www.cruim.com.

Oh and the cash with Transact is under a trust deed so not subject to the £35k guarantee as with other banks. You would get all the money back if they collapsed.

Even if the interest doesn't take you over your annual allowance you still need to inform HMRC unfortunately.

If you decide to go with an adviser I would definitely suggest an independent. We've spent a lot of time tidying up clients' finances after they've had an encounter with the adviser in their local bank who only wants the commission for a gimmicky and unsuitable product. (Not suggesting all bank advisers are like this, just my experience!)

That's right, Helennn, interest from an ISA doesn't have to be declared for tax credits. It's a pain that you can only put in £3600 a year - the amount hasn't been going up in line with inflation, which seems like a bit of a swizz to me. So if you suddenly come into a lump sum, then it's not so helpful.

(Yet!) one more thing - if you do decide to put any of the money into "investments" - shares and the like - don't forget to look for the lowest management charges. They can really add up over time. I really don't think that that's a good idea for you though, except in small amounts. Generally people do much better putting small amounts in on a regular basis, rather than a lump sum in in one go. A lump sum will involve "playing the markets" which even experts get wrong on a pretty regular basis. Small amounts over long periods of time (just like a pension) average out all the risks and generally do well.

You can put 25K each into Zopa its social lending set up by the people who created egg. You can set your own interest rates depending on your risk. We are up to 12% and in the 18months we have been doing it have not had any defaults.