Can one actually save hundreds of thousands without problems?

hallmark

My post was perfectly clear to anyone not stupid, obtuse, or who sighs for no reason.

Enough savings can take you into the higher rate as I said.

[Deleted User]

hallmark wrote: »

or who sighs for no reason.

Oh there was reason alright.

le_loup

No one said it couldn't.
Only that any interest could ... not what the OP was thinking at all.

G_M

Getting back to the point......

If the relative gives back the same amount as was loaned, then the lender has earned nothing, so pays no tax (as said, the borrowing relative may have payed 20% tax on interest earned on his savings account).

However, if the relative gives back more than was loaned (ie interest), then that should be reported and taxed as income (presumably at 40%).

atush

hallmark wrote: »

It could if you have enough savings.

If you are going to split hairs, and I think you have, then yes the INCOME not the savings puts you over into a higher tax threshold. So your statement shoud say having enough savings invested at a rate that wouldbring you over the threashold. And given current and recent rates, it can take a whole lot of savings to push one over the breach and into tax.

In any case this a moot point. If I was a gambling man (and I am neither) then I would put money on the OP not receiving 100% of assets given over to friends and family returned, much less any % of any interest gained (should it have been invested and not spent). a totally foolish enterprise really.

I'd rather pay tax on actual income with my capital retained than see Uncle Eddie spend my savings on strippers and !!!!!!. Or Auntie Maybel spending it on cushions, cats and the slots. Or see it eaten up in a divorce settlement to someone else's spouse (in this case Edddie's ;-)

I gotta say, there are some right financial losers down the local pub these days?

Sensory

G_M wrote: »

Getting back to the point......

If the relative gives back the same amount as was loaned, then the lender has earned nothing, so pays no tax (as said, the borrowing relative may have payed 20% tax on interest earned on his savings account).

However, if the relative gives back more than was loaned (ie interest), then that should be reported and taxed as income (presumably at 40%).

As I understand it, such giving would be considered gifting, which doesn't fall under income tax.

If he gives £10,000 to his brother, and then receives £10,000 five years later, he's lost out on fives years worth of compound interest. To my knowledge he received the same amount he sent, although the account from which he received the money was different to the account to which he originally sent the money.

I'm quite shocked none of them understood (or understand) the tax process.

MoneySaverLog

G_M wrote: »

Getting back to the point......

If the relative gives back the same amount as was loaned, then the lender has earned nothing, so pays no tax (as said, the borrowing relative may have payed 20% tax on interest earned on his savings account).

However, if the relative gives back more than was loaned (ie interest), then that should be reported and taxed as income (presumably at 40%).

Not necessarily, the money can be gifted back and forth. So one brother could gift £200,000 and then in a few years time gift back £250,000. Only clause being if one was to die within 6 years I believe inheritence tax may come into play with very large sums.

Obviously the brother would have to pay tax on his earnings, to save the extra £50K ;-)

If the money is paid into the bank and the interest earned on the capital takes you over the various tax bands then tax is payable at 20% or 40% depending on the amount of interest as it would be classed as income. But given the really low rates at the moment this would require a serious amount of cash in the bank, certainly over 7 figures at 4% as 40% would only kick in at anything over around 35K after you take into account any personal tax allowances worth of interest.

G_M

Sensory wrote: »

As I understand it, such giving would be considered gifting, which doesn't fall under income tax.

If he gives £10,000 to his brother, and then receives £10,000 five years later, he's lost out on fives years worth of compound interest. To my knowledge he received the same amount he sent, although the account from which he received the money was different to the account to which he originally sent the money.

I'm quite shocked none of them understood (or understand) the tax process.

What I said was "If the relative gives back the same amount as was loaned, then ....".

So I was referring to an interest free loan, not a gift.

Much depends whether the original ...er.. 'handing over' of funds was done in expectation of its being returned. If the expectation on each side was that it would later be returned, it's a loan.
If not, it's a gift, with no obligation for it to ever be returned.

Yes - a gift may have inheritance tax implications, and indeed income tax if it were over the threshold for annual gifts.

A loan would only have income tax implications (for the lender) if interest (income) were earned.

thenudeone

hallmark wrote: »

My post was perfectly clear to anyone not stupid, obtuse, or who sighs for no reason.

Enough savings can take you into the higher rate as I said.

As has already been explained very clearly - No it can't.:wall::wall::wall::wall::wall::wall::wall:

Biggles

Sounds like BS to me. As in 'I've got so much I can give it to my brother'.

The fact is, a gift that is given on the understanding that it is being repaid isn't a gift at all as far as HMRC is concerned, the cash is still the property of the donor.