Borrowing money from parents oversea for buying a house. Any problem relating to tax?

Cisco001

At the end of the day, I can agree with my parent that they won't charge any interest on the loan, and put it black and white on paper. Then alternatively paying them something else back as a gift. I assume UK government can't charge that?

And in worst case, I transfer money from my UK bank A/C to HK bank A/C. then transfer money from my HK bank A/C to their HK A/C. Since the transaction not made in UK, I think I will be fine?

Cisco001

grey_gym_sock wrote: »

thanks, i didn't know that.

however, that seems to be about UK businesses paying interest to somebody outside the UK. so it would apply to BTL, but what if the property is for OP to live in? (i don't think OP specified which it is.)

Yes, I will live in it, and the house will be under my sole name.

Cisco001

grey_gym_sock wrote: »

well, there are really 2 questions: is this interest liable to UK tax? and does tax need to be withheld?

it's liable to UK tax if it arises in the UK, isn't it? but can't that be avoided by setting up the loan in HK? (or does that only work if it's an unsecured loan, not if it's secured on a UK property?)

presumably, if the interest doesn't arise in the UK, UK tax definitely doesn't have to be withheld. if it does arise in the UK, does tax ever need to be withheld on a private loan (when you are not a "deposit taker")?


(i don't know how much this matters. i'm guessing that interest is taxed in HK, though perhaps at the lower rate than in UK.)

To my understanding, no tax on interest in HK. Interest received by or
accrued to a person carrying a trade, profession or business in Hong Kong is chargeable to tax under profits tax.

ceeforcat

Cisco001 wrote: »

At the end of the day, I can agree with my parent that they won't charge any interest on the loan, and put it black and white on paper. Then alternatively paying them something else back as a gift. I assume UK government can't charge that?

And in worst case, I transfer money from my UK bank A/C to HK bank A/C. then transfer money from my HK bank A/C to their HK A/C. Since the transaction not made in UK, I think I will be fine?

Thanks parents for the loan and interest free too! Normally I could have paid up to £3000 a year interest on that. I have sent to you a gift of (insert amount up to £3000) for Christmas/your birthday/your anniversary. Enjoy.

P.S. It also helps me because I have an annual gift exemption of £3000 which means that I can give away up to this amount without any tax repercussions for either of us.