Where should I put £40,000 in cash I won't need for two years?
9 April, 2026
Question by Boring Money reader
Answered by Holly Mackay
This is quite straightforward given your timeframe. With two years, I wouldn't go near shares — keep it in cash. Think about tax. Investigate shorter-term gilts if you are near your limits for capital gains tax allowances, especially if you are a In the UK, the first £12,570 of your income is tax-free, covered by the Personal Allowance. After that, earnings up to £50,270 are taxed at 20% — the basic rate. Income between £50,271 and £125,140 falls into the higher rate band and is taxed at 40%. Anything above £125,140 is taxed at the additional rate of 45%.. Use your cash ISA allowance of £20,000 this tax year, and consider the best fixed-rate accounts with the rest — either a one or two-year fix. But again, remember to work out what the tax position would be for you and compare this to your position if you bought a gilt (or government bond). Hargreaves Lansdown has some helpful information on gilts.
