Borrowing money from Family

jennifernil

spdavies wrote: »

Firstly thanks for all your views.

Secondly wow - calm down a bit. I have an excellent relationship with my Dad and have absolutely no intention of not paying him back with the appropriate amount of interest. I see him every day so its hardly like i am going to run off with his money!!

The first £5k was a gift following the death of my mother to avoid him keeping it all and then getting hit for inheritance tax down the line.

This second £5k is perfectly within my means to pay back - i just don't have the capital at hand so i thought a loan within the family would make more sense than getting hit by high interest rates. If i repayed the right amount he could get more than he would in his current savings account too!

Mojisola you mention the 3k per year for inheritance tax. Is that per person? i.e. could he give £3k to me and £3k to my wife (and perhaps even children).

Just to be clear - my Dad is looking to offload some of his savings to avoid getting hit with a massive inheritance tax bill (like his Dad did) and we have spoken about this so i am certainly not stitching him up!!

Thanks again all

To be totally disregarded for IHT, it's £3k per year per giver, so £3k total for Dad. However, if he did not give away anything last year, he can give £6k this year.

If he has enough income, he could make regular gifts to, for example, his grandchildren, as long as he is not taking it from savings.

If your Mum left everything to Dad, he now has a double IHT allowance at death, so currently £650k.

If he is giving you a loan, and he wants to offload savings, why not an interest free loan? If you do pay him interest, he should declare that for tax purposes, just like bank interest.

mumps

easy wrote: »

If he wants to avoid leaving enough money to attract inheritance tax, then HE should live a little. Spend some of the money, go on nice holidays (he could take his son and family with him if he wanted to), buy himself a nice car - maybe he could leave it to you when his time comes ?

Maybe the OPs dad is living a little or even alot. Surely that is up to him.

easy

mumps wrote: »

Maybe the OPs dad is living a little or even alot. Surely that is up to him.

of course it's up to him, never suggested it wasn't.

Blimey, some folk will make an argument out of nowt.

spdavies

Thanks easy and others who've tried to be constructive!

Something corporate - i appreciate everyones views and maybe i should have been a little more prescriptive with my original question. However, i don't appreciate people venting as a result of personal experiences that are nothing to do with me and calling my Dad a fool or telling me to stand on my own two feet!!!! That wasn't the question!

sistafromanothermista

However.....when you come onto an open forum with a question/problem/issue you open your situation up to all sorts of opinions.
Whether you want to agree with them or not, they are the opinions of others.

If you don't like what is being said or advice which is given don't post your business on an open forum!!!......simples....

Apples2

Nobody is questioning your ability to stand on your own two feet, it is already confirmed you cannot.

This year alone you are taking 10k of other peoples money.

[/sarcasm]

spdavies

Fair enough.

Anyhow - thanks to all those who have given constructive advice.

somethingcorporate

I have a feeling you will ignore the most appropriate advice but that is your prerogative.

Have you read the lending to friends and family thread?

FinanceForEveryone

I borrowed £7K from my dad a couple of years back to consolidate a bank loan at 11% APR and some credit cards. I paid off the loans and cards with the money straight away. As well as boosting my credit rating, I have just paid my dad back the final instalment with more interest than he got from savings account so it was a good deal for both of us. So there's one success story, probably among many disasters, about lending money to family.

The key thing is my dad knows me and trusts me, otherwise he wouldn't have been silly enough to do it!!