ESA support group and a loan

dennisryanuk

Hello all,

I am in the ESA support group payment and a charity has offered me a loan against my property. This is for living and retraining costs.

If I put the loan into an ISA and not into my regular bank account, is it counted as assets - ie. above £6,000 I have to declare it and my ESA is reduced accordingly on the pro-rata scale?

And would the loan amount be counted as income for this tax year? (so if I went over £10,600 annual allowed I would have to pay 20% on the rest)

Thanks,
Dennis

tomtontom

The loan would be counted as capital irrespective of where you kept it. Some charitable payments are excluded, you'd need to give more information to determine if this is the case.

I'm a little dubious of charities offering secured loans. Have you taken independent advice on this?

dennisryanuk

Thanks T - where would I go for this advice?

And what about the income tax part of the question...

tomtontom

It would not be subject to income tax as it is capital, not income.

For advice on the loan you could speak to CAB, or even a trusted friend who is financially savvy. Is it a well known charity, and are you being charged interest?

dennisryanuk

The charity is trusted and has been around for a while.

Just to clarify on the income tax - the charity pay the loan to my bank account as a lump sum. Surely that would count as income for the year?

sheeps68

dennisryanuk wrote: »

Hello all,

I am in the ESA support group payment and a charity has offered me a loan of 5-10K against my property. This is for living and retraining costs.

If I put the loan into an ISA and not into my regular bank account, is it counted as assets - ie. above £6,000 I have to declare it and my ESA is reduced accordingly on the pro-rata scale?

And would the loan amount be counted as income for this tax year? (so if I went over £10,600 annual allowed I would have to pay 20% on the rest)

Thanks,
Dennis

The question is not if your in support group but are you contributions based or income based ESA. If contributions based there is no issue with savings.

dennisryanuk

I am income related, so I guess an issue with savings then

missbiggles1

Won't you be using it to pay for training costs and living expenses rather than saving it?

epitome

It's not income because it is a loan not earnings.

Speak to Inland Revenue to confirm though.

sangie595

dennisryanuk wrote: »

Hello all,

a charity has offered me a loan of 5-10K against my property. This is for living and retraining costs.

If I put the loan into an ISA

So a charity have given you a loan for a specific purpose and you don't intend to use it for that purpose? And you have told the charity this?

midnight_express

I'd be very worried about the "against my property". It sounds like a scam.