Capital gains on a personal loan

cgtconfused

I am confused as to whether if I make a personal loan to a friend I will later be liable to Capital Gains Tax if the loan is greater than the £10900 allowance. I'd appreciate any advice on this.

dealer_wins

I would be more worried about a capital loss when your friend fails to repay you!!!

PeacefulWaters

cgtconfused wrote: »

I am confused as to whether if I make a personal loan to a friend I will later be liable to Capital Gains Tax if the loan is greater than the £10900 allowance. I'd appreciate any advice on this.

You should pay income tax on any interest collected.

But it is madness to lend to friends if you:

1. Want to retain the friendship.
2. Want to get your money back.

Don't do it.

pvt

Capital Gains tax is a tax on the gain you make on something you buy and sell for more money later. It does not apply in any way shape or form to a loan.

If you charge you friend interest on the money you lend then that interest is income and you are liable to pay income tax on the interest you earn.

Anyway, as "dealer wins" advises, don't do it, odds are you are likely to lose some or all of your money.

cgtconfused

thanks for the advice, even though none of you seem particularly optimistic about the prospect of seeing any kind of return!

Pixie5740

cgtconfused wrote: »

thanks for the advice, even though none of you seem particularly optimistic about the prospect of seeing any kind of return!

The forum is littered with tales from people who've got financially involved with friends & family where it's gone sour.

It sounds like you are willing to loan your friend a large some of money. I'd be wary and want to know they can't borrow the money from their bank or another mainstream lender.

I was once told never to lend a friend more than you can afford to lose.

da_rule

If you really are sure about loaning money to your friend then at least get an agreement in writing, setting how much the loan is for an repayments. There are way too many stories of loans between friends becoming 'gifts'.