ChatterBank2 mins ago
How Much Tax?
6 Answers
My husband and I own our house outright. We are considering selling it and moving into rented property while we look for another house to buy. We are thinking of putting the proceeds of the house sale into a high interest account, then paying for a rented house out of the interest we would earn, as an interim measure, to give us more time to find the right property to buy, and also to become "chain-free".
We expect to sell for around �200,000. My husband earns �16,000 per year (gross) with a tax code of 522L and I receive �4,680 per year incapacity benefit (my tax code, I think, is 503L). Anyone know how much tax we would have to pay on the interest we would earn from �200,000, and whether there are any special rules (for example, is it treated differently if it is cash from the home you have lived in, and you are going to use the money to buy another property to live in, rather than buying purely just to sell on and make a profit) and also if there are any rules about who the money belongs to - it is actually both of ours, 50/50, but we wonder how the taxman would count it for tax purposes? For example, could I put it into a high interest account in my name only, therefore perhaps paying less tax than if it was in my husband's name (his income being �16,000 per year gross).
Or would it have to be put into a joint high interest account, with both our incomes added together for tax purposes? I know we should speak to an accountant if we decided to go ahead with this plan, but at the moment we are not sure what we want to do. Are there any ABers out there who have some knowledge about this sort of thing? My husband thinks that we would have to pay such a hefty amount of tax that it wouldn't be viable. We are thinking of this being a short-term plan. Which leads me to another question - could you put the cash into a high interest account for 6 months, or would it have to be for longer? Thanks ever so much for any replies.
We expect to sell for around �200,000. My husband earns �16,000 per year (gross) with a tax code of 522L and I receive �4,680 per year incapacity benefit (my tax code, I think, is 503L). Anyone know how much tax we would have to pay on the interest we would earn from �200,000, and whether there are any special rules (for example, is it treated differently if it is cash from the home you have lived in, and you are going to use the money to buy another property to live in, rather than buying purely just to sell on and make a profit) and also if there are any rules about who the money belongs to - it is actually both of ours, 50/50, but we wonder how the taxman would count it for tax purposes? For example, could I put it into a high interest account in my name only, therefore perhaps paying less tax than if it was in my husband's name (his income being �16,000 per year gross).
Or would it have to be put into a joint high interest account, with both our incomes added together for tax purposes? I know we should speak to an accountant if we decided to go ahead with this plan, but at the moment we are not sure what we want to do. Are there any ABers out there who have some knowledge about this sort of thing? My husband thinks that we would have to pay such a hefty amount of tax that it wouldn't be viable. We are thinking of this being a short-term plan. Which leads me to another question - could you put the cash into a high interest account for 6 months, or would it have to be for longer? Thanks ever so much for any replies.
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any interest you receive will be taxed at 20% initially. If your total income for the year exceeds the threshold for HRT then you pay 40% on the amount concerned. However you can arrange it so that you can use both yours and your husbands allowance up to HRT so you should avoid paying any tax at 40%. so doing a rough calculation, 200000 should earn about 6.25% interest for a year that's �12500 add that to what you are earning already and that does not breach the HRT theshold so you'll be paing about �2500 in tax on the interest earned. You can save some of that by utilising your husbands tax free allowance.
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