Banking and taxes

sam.sam_2

Hi all,

I have received a large amount of money from my family as a loan. This loan will be used as a deposit for a mortgage. The problem is that my family live abroad (non Europeans) and that I now have the amount in CASH (I managed to find someone who wanted to transfer money to my family's place and I have all the amount in cash).

Now I just want to put the money into my account so that I can apply for mortgage. I don't want to get any interest for this money, and obviously I don't want to pay any tax!!
I have all the amount in my flat and I can't sleep at night leaving large amount of money. This is really risky. My idea was to put small amounts over a period of time into my two bank accounts and wife's two bank account. I'm just worried that putting these amount could alert the bank or the taxman about the money increase.
Should I worry about this?
Do I need to pay tax if I don't get any interest?

Archi_Bald

Tax position: https://www.gov.uk/bringing-cash-into-uk

It's not a good idea to try and hide the money from the taxman: http://www.telegraph.co.uk/finance/personalfinance/tax/11697816/What-does-the-taxman-know-about-you-your-finances-and-your-lifestyle.html

If the money is a loan, as opposed to a gift, you might find it difficult to get a mortgage. Ask on the mortgage board for more info.

sam.sam_2

Thank you Archi Bald,

But why would I need to pay a tax? I didn't bring the money through the airport to declare it! Moreover, I won't get any interest on it. So why it should be taxed?
I am not trying to hide it. But I can't see what sort of tax I should pay!

Although it is a loan, but we have flexibility. I can pay it back with no interest whenever I can. It's just from my parents.

Chino

You claim:

sam.sam wrote: »

I am not trying to hide it.

but you said:

sam.sam wrote: »

My idea was to put small amounts over a period of time into my two bank accounts and wife's two bank account.

Archi_Bald

sam.sam wrote: »

But why would I need to pay a tax? I didn't bring the money through the airport to declare it! Moreover, I won't get any interest on it. So why it should be taxed?
I am not trying to hide it. But I can't see what sort of tax I should pay!

I have no idea whether you need to pay tax or duty. I just posted a link to the HMRC website that describes the law on import of money.

If you feel you are not responsible as it wasn't you who brought the money into the UK, you should also read up about money laundering.

I also posted a link that gives you information about the HMRC Connect system.

I cannot judge whether you/your money broker complied with the UK laws. It is your decision what you make of the information I posted and whether you want to ignore UK law. If you break the law, the consequences are all yours to bear.

Nothing else I can say regarding this, really.

xylophone

I am wondering whether rather than having brought money into the country, he has found someone in this country who owed money to his parents and who has given him this sum in cash?

His parents are willing for him to borrow the money on an interest free basis.

Apart from any difficulty he might have in paying large sums in cash into his accounts/his wife's accounts (non-interest bearing, it would appear, so no tax to pay), any financial institution from which he wanted to obtain a mortgage would wish to know the source of the deposit and might well not be happy to accept a loaned, as opposed to gifted, deposit.

sam.sam_2

Thank you all for your comments.

I really appreciate your comments. I tried to read about the UK Tax law and I couldn't find any sort of tax that I should pay. It's not an income that I need to pay tax for! I don't want to break any law here, and I'm only doing this because I don't want look suspicious.

Ballard

If you are depositing a significant amount of cash into UK bank accounts it might well be flagged as potential money laundering. Banks have to be on the lookout for this sort of thing and should pick up that you're regularly paying in large-ish amounts.

I'm not saying that they will and neither am I saying that you're laundering money but there's potential there.

georgehere

There's a few things to think about:

HMRC don't know where you got the money from ... if they found out you had some more money - what would they think?

Perhaps they would think you earned it ... and then they might think, if you earned it you should pay income tax.

Perhaps they might think it was dividends from a foreign company invesment ... who knows.

The point is, you have a loan, so it would be wise to have a letter from someone saying it is a loan. Then nobody could make the mistake of assuming it was income and ask for taxes.

The next thing to think about is that when you go to pay this money as your deposit or whatever, your solicitor will ask you where you got it from. They need to reassure themselves that you got the monet legitimately ... and an interest free loan from your parents or anyone else for that matter is legitimate of course.

I don't think any solicitor will want to have you turn up with a bag of cash, so you will eventually end up paying it into your bank account at some point.

I suspect they will want at least a letter from your parents and even they could ask to see certified copies of your parents bank statements from the past 3 months or so. Maybe your parents bank statements will show 30k coming out in cash and you can say that's the same 30k that you paid into your own account on such and such a date. Hopefully they will accept that explanation.

Finally, there are rules about loans/gifts. In part this is to stop parents avoiding death duties ...otherwise they could keep on making loans that don't get repaid to their offspring - so it's good for your parents to also have a record/letter as well.

grumbler

Chino wrote: »

You claim:



but you said:

Hardly a surprise that people are afraid of even legitimate actions as a result of the current outbreak of AML paranoia originating from USA.