Loans with inflation-only interest - still liable for income tax?

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  • purdyoaten
    purdyoaten Posts: 1,159 Forumite
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    pvt wrote: »
    CGT does take inflation into account, so it does seem incongruous that income tax doesn't.

    Not since 2008 - unless the disposal is made by a Ltd Company.
    There are 10 types of people in the world - those who understand binary and those who do not. :doh:
  • stripey1969
    stripey1969 Posts: 55 Forumite
    First Anniversary First Post Combo Breaker
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    Currently chuckling to myself imagining companies up and down the country swapping their salary systems to monthly tombolas ;)
  • dealer_wins
    dealer_wins Posts: 7,334 Forumite
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    jaydeeuk1 wrote: »
    Ok.. bear with me on this, I'm not known as mr loophole for nothing.

    Set the loan as interest free, ask them to 'put aside' (ie, don't spend) the interest you wish to charge.

    There is no tax on gambling winnings.

    Both register with betfair (or smarkets as its cheaper), find an event where there is no liquidity for a few weeks. If you are expecting £1000 in interest, ask the person to find an event that is extremely unlikely to happen but settles not too far in the distant future and offer up odds of 1.01 and with no current liquidity. You then lay this 1.01 for £1000. Most likely the event will 'lose', you'll win £1000 minus betfairs 5% commission of £50, you're all settled and have your interest without any tax implications. Should it win, you'll be down £10 and your mate up £9.50, so just do it again until the result comes in that you want.

    Good idea, but if the 1st bet wins (unlikely I know), I wouldnt try it again. Betfair may suspect money laundering seeing this suspicious betting between the same 2 accounts with one account offering stupid odds to the other, and they could freeze both accounts.
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