Can I give a family member an interest free loan

pking1601

Hello
I want to give a close family member an interest free loan of £20k to help her out during a very hard finiancial period for her having lost her job. I did want to keep it as informal as possible and any repayment made when she can afford to do so.

Are there any tax implications on interest free loans?
Are they allowed?

Pixie5740

Yes you can lend your family member the money and no there are no tax implications. When lending money to friends and family it's best to treat it as a gift in your own mind and if you get some or all of it repaid that's a bonus.

dealer_wins

Dont lend it to them, gift it to them.

That way if you do get it back (unlikely) it will be a nice bonus, and if you dont, you wont ruin your relationship with them and stir up trouble.

deaston

dealer_wins wrote: »

That way if you do get it back (unlikely)

How very trusting of you.

MEM62

First I suggest you read all the various threads containing horror stories about lending to friends and family.

If you still want to proceed then I suggest that you give your relative the money, write it off and, if you see anything paid back, consider it a bonus.

Yes - the situation usually is that brutal and there is no sugar-coating it.

burlington6

Do NOT give them any money. You will regret it.

Baby_Angel

Like many have said already, treat it as a gift if you can afford it. I have way too many experiences lending money and it only worsens family relationships. I never saw most of it back.

Mojisola

pking1601 wrote: »

Hello
I want to give a close family member an interest free loan of £20k to help her out during a very hard finiancial period for her having lost her job. I did want to keep it as informal as possible and any repayment made when she can afford to do so.

£20k in one go is a lot of money. Could she get by with a smaller amount?

Is she claiming all the benefits that she's entitled to? Having £20k in the bank could reduce the benefits she's able to claim.

Suggest she puts a statement of affairs on the Debt-free Board so that suggestions can be made to help her reduce her outgoings.

I would say to either give her the money or make it official by writing and signing an agreement - the halfway house of 'not quite a loan' with no set expectations will cause problems in the future.

Rodders53

You should formally document this, both signing an agreement, and keep records of any repayments made. That way if you ever need the money back you can prove the loan was made... etc.,.

Should you die the loan money outstanding would form part of your Estate so you may need to consider what happens in that (hopefully very unlikely) event and include it in your Will?

A GIFT of £20k also needs recording as it may have Inheritance Tax implications should you die ... You can only gift up to £3k each year without any IHT questions asked. You need to live > 7 years for any larger gift to become exempt.

The money loaned/gifted may affect any means tested benefits.

Gaz83

deaston wrote: »

How very trusting of you.

Have a look at some of the threads on here about people trying to get money back from friends and family.

burlington6

She hasn't got a job, has no way of paying you back and if you give her the money she will probably put off any hurry in looking for work until she's ploughed through your 20k