Lending money to elderly parent as bridging loan - tax issues?

teddysmum

murphy_le_chat wrote: »

Thanks for all the replies...



I assume you mean 'the interest as a cash gift'...?

If, for example, she needs the loan for say, 3 months, the amount of interest we'd each lose would only be about £200 at current cash ISA rates. She doesn't want us to be out-of-pocket.

Is there anywhere I can find a simple 'pro-forma' loan document?

Yes. Document the loan, so that amount is recoverable should the unthinkable happen.


£200 could quite easily be a gift to say 'thank you' and well within a realistic amount for a gift. (It seems, to me, that people think nothing of spending that sum on a child's birthday presents).

Bluebirdman_of_Alcathays

teddysmum wrote: »

Yes. Document the loan, so that amount is recoverable should the unthinkable happen.


£200 could quite easily be a gift to say 'thank you' and well within a realistic amount for a gift. (It seems, to me, that people think nothing of spending that sum on a child's birthday presents).

It isn't a gift though - it is clearly and unequivocably linked to the lending of money. I'm sure the OP won't get caught - but to pretend it isn't interest is disingenuous.

xylophone

We'd obviously loose the ability to put it all back into an ISA in one year.

Are your current ISAs "flexible" ISAs? See below.

http://www.moneysavingexpert.com/savings/flexible-ISAs

booksurr

agrinnall wrote: »

Bit of a sweeping statement, surely that depends on the OP's personal tax situation and level of interest earned outside of tax free wrappers. There's a good chance that the £200 won't be taxable at all.

your desire to cast sweeping statements misses the point that "be taxed on it" does not mean PAY tax on it

to be taxed on is the liability
to pay tax on is the tax to be paid taking into account all the things you mention

agrinnall

booksurr wrote: »

your desire to cast sweeping statements misses the point that "be taxed on it" does not mean PAY tax on it

to be taxed on is the liability
to pay tax on is the tax to be paid taking into account all the things you mention

I'm sure in strict legal terms you are right, but most normal people would understand 'taxed on' as the same thing as 'pay tax on'.

getmore4less

Stick to an interest free loan(not a series of gifts)

Make sure there are repayment terms so it can be enforced.
sale of property and mums death are the two obvious ones.

Also consider your death and how you want the debt to your estate handled.