family loan and tax query

Yavid

Hi All,
Forgive me if I don't conform to correct etiquette but this is my first post here.
The question is...
About 6 years ago I lent my daughter and son-in-law a 0% loan for £20k to improve their house. They are now in a position to repay it (or most of it) but he says that as he is self-employed and registered as a limited company there may be tax implications as the repayment may be considered income to us. Is this true ?
I am particularly interested as we are about to loan another daughter and son-in-law a 0% loan of £30k as a deposit on their imminent house purchase.
BW
David

redpete

How can someone giving you back your money be counted as income? Sounds nonsense to me.

Unless the improvements were something to do with his business I don't understand how it can affect his income / business either. (Unless he wants to claim that the payment is a business expense in order to reduce his tax liability - ut that would be dishonest and possibly illegal.)

Caz3121

Yavid wrote: »

I am particularly interested as we are about to loan another daughter and son-in-law a 0% loan of £30k as a deposit on their imminent house purchase.

does the mortgage lender know the deposit is from a loan. Most will nor accept a loan as a source of deposit so you may have to sign to say that it is a gift that does not need to be repaid!

Yavid

Caz3121 wrote: »

Most will nor accept a loan as a source of deposit so you may have to sign to say that it is a gift that does not need to be repaid!

Thanks I didn't know that

bargainbetty

If you received interest on the sum, that would be considered taxable income. The repayment of the capital is not. Ask them to sign a short letter to the effect that the repayment of the capital is final, and you'll be fine.