Loaning some savings to family members

[Deleted User]

Dan83 wrote: »

I've borrowed a large amount to my uncle about 10 years ago

At risk of being pedantic, you borrowed FROM your uncle, or you LENT to him?

AlwaysLearnin

If you go down the lending route,I'd suggest googling "Promisory Note". These are essentially a more formal version of the letter kidmugsy suggested, and you can pick up some good ideas re wordings etc to cover your self/situation.

Playing_with_Fire_2

OP, can you confirm - is the plan to give them the interest of the £10k or the £10k?

If you want to give them just the interest it seems much easier to just give it to them, or would you start paying tax on the savings next year if they were in your name?

Leedslad8t6

Hello,

That is correct all interest proceeds go to them to spend on the house, I receive none of that.

I pay tax on my savings at the moment (outside of my ISA wrapper) and will also reach the 1k tax free limit next financial year (so will continue to do so via the self cert route).

I have loaned them money in the past and gotten it back no problems, obviously there is a risk as with anything in life. It is however very small.

I have already looked at and obtained a promissory note template from the web and will have a witness at any signing.


D

Leedslad8t6

Well in actual fact it would otherwise be in a non help to buy ISA on a shoddy rate (most likely fixed for several years) as I have maxed the accounts i can open up myself (5% savings loop hole)

D

atush

So, if they a rent married (your term step dad said they were) how is the house owned? By her? Him ? or both?

If they are not married I would not lend a bean to the step father. I would lend it to your mother. Unless he owns the house on his own, in which case, lend it to him with a proper lending agreement.

Leedslad8t6

They have been a couple for over 12 years and are both on the mortgage & live together.

D

Playing_with_Fire_2

Have you considered setting up an online savings/current account for them but keeping the login information and then setting up a standing order so that the interest automatically goes into the main account that they use so that they can spend it on the house?

Have you considered investing so that you can get tax free dividends and capital gains (if you are saving to buy a house in the next few/five years this might be unsuitable for you though)?

Leedslad8t6

Hello,

I am terrified of stocks/shares and wouldn't know where to start.

Yes I will be buying a house within 5 years so i'd like things as liquid as possible.


I have decided to go down the promissory note route and have them use some of the capital which is then replaced by interest over the year (up to 1k).

Fully understand other families have fallen out etc in the past but having lent them money in the before I am satisfied things won't be different this time.

I just wanted to make sure It was legal, they don't claim any benefits, are eligible for contributions based JSA if needed and earn well under 20k each.

Thank you all for your help.


D