Parents to offset...

Grz.26

Hello, I wonder if people could shed some light on if this is a win/win situ or am i missing something?

I have a mortgage of 50k, father has 50k in an ISA doing nothing. So i said to him, ill pay him the interest - tax of what he would get in the top savings account, that way he gets better interest and i don't pay anything on my mortgage. Oh i have a offset mortgage where friends and family can offset.

I was just wondering is this a good idea for him to do this? Would he lose out on his ISA allowance if he were to do this. It would help me out a lot, but just want to check to see if i have covered everything.

Any advice is appreciated.

Thanks,

Rich

dimbo61

So you have a mortgage with YBS !
Your Dad can of course open an account in his name with his money offsetting your mortgage.
If you paid him any Interest he would have to declare this on his tax return.
However the first £1000 of any interest is allowed if dad is a lower rate tax payer.

Grz.26

Thanks dimbo61 yes, YBS, are they the only people to do this? He is retired, does this make a difference?

Farel01

It shouldn't. Even retired your dad will still have income e.g. pension so he'll still pay tax on all income above 11K.

dimbo61

Dad is still allowed to earn £1,000 a year in interest on top of his £11,000 personal allowance.
I am sure you could pop round every month and take him out for lunch/dinner.

Martin and the MSE team did a recent article about earning upto £17,500 a year without paying tax.
Lodger, Interest, rent a parking space, etc