Can we lend our son money?

Kaspah
Kaspah Posts: 2 Newbie
in Loans
Dear forum,
Can anyone advise me please, we wish to loan our son £45k can we do this without paying tax?
What would be the best way to do it?
Thank you
«1

Comments

  • TadleyBaggie
    TadleyBaggie Posts: 6,047 Forumite
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    Would you be charging interest on the loan?
  • Kaspah
    Kaspah Posts: 2 Newbie
    Hi,
    No we wouldn't, but could if it made it possible!
    Thanks
  • Ebe_Scrooge
    Ebe_Scrooge Posts: 7,320 Forumite
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    If you're not charging interest then there are no tax issues.


    Where there may well be issues, however, is in enforcing repayments. This forum is littered with tales of people lending money to friends and family, then coming unstuck when the loan isn't repayed. The general advice is to look upon it as a gift, with no expectation of it being repayed. If it is repayed then that's a bonus.
  • bengalknights
    bengalknights Posts: 5,021 Forumite
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    As long as you get a "contract" stating its a loan and not a gift then all is well.

    Its when its a gift and you if you pass away within a certain period where there is tax due
  • iolanthe07
    iolanthe07 Posts: 5,493 Forumite
    If you were to die within seven years then Capital Trtansfer Tax may be payable on a sliding scale, but you really need to take professional advice for a sum as large as this, imho.
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  • bargainbetty
    bargainbetty Posts: 3,455 Forumite
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    Please also note that if you are lending this sum of money to your son to assist in a house purchase, the mortgage lender may insist on seeing a statement that the funds are a gift, not a loan.

    If the sum is a loan, they may consider it a debt liability for the purposes of arranging his mortgage and he may not be offered the sum he needs to purchase a property.
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  • MEM62
    MEM62 Posts: 4,746 Forumite
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    Kaspah wrote: »
    We wish to loan our son £45k can we do this without paying tax?

    I am struggling to see why you would think you would pay tax on a sum of money that you are lending to your son.
  • Gambler101
    Gambler101 Posts: 580 Forumite
    MEM62 wrote: »
    I am struggling to see why you would think you would pay tax on a sum of money that you are lending to your son.

    I dunno, we will be paying tax on the air we breathe soon!
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  • enthusiasticsaver
    enthusiasticsaver Posts: 15,566 Ambassador
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    If you are gifting your son money and you die within 7 years then inheritance tax may be liable on a sliding scale depending on size of your estate (not capital gains as someone said up thread). If you are loaning him money and not making a profit (ie charging interest) then there is no tax to pay either by him or by you.

    If this is to buy a property then the bank needs to know he will have an additional loan to pay in addition to the mortgage if applicable and you need to state you have no interest in the property.
    I’m a Forum Ambassador and I support the Forum Team on the Debt free Wannabe, Budgeting and Banking and Savings and Investment boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.
  • The_Real_Cheddar_Bob
    The_Real_Cheddar_Bob Posts: 542 Forumite
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    gift it. he is your son
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