Claiming Loan interest

Aia

I have loaned my father £10,000
he is paying me interest which I will declare on my tax return, under 'Untaxed UK interest' received.

I lent the money from my Mortgage, which I am now paying interest. How do I declare this interest as an expense on my tax return.

Other info, I am not self employed. I am employed.

Any advice would be appreciated. I thought this would be quiet simple to put on my tax return.

Arleen

I think that you will need an accountant on this one.

CLAPTON

Aia wrote: »

I have loaned my father £10,000
he is paying me interest which I will declare on my tax return, under 'Untaxed UK interest' received.

I lent the money from my Mortgage, which I am now paying interest. How do I declare this interest as an expense on my tax return.

Other info, I am not self employed. I am employed.

Any advice would be appreciated. I thought this would be quiet simple to put on my tax return.

did you increase your mortgage specifically to lend the money to your father
did you declare this to your lender
do you have a consumer credit license?

Aia

CLAPTON wrote: »

did you increase your mortgage specifically to lend the money to your father
did you declare this to your lender
do you have a consumer credit license?

did you increase your mortgage specifically to lend the money to your father?
Yes

no, this would have no concern to the lender

and no

Alderbank

Alternatively since it is your father you could make the loan interest free. He might wish to give you a gift.

Much nicer. Also HMRC need not be involved

foxy-stoat

You could ask HMRC if the interest you are paying is an allowable expense, if it is then put the figure in box 17 of your tax return.

You would need to demonstrate the actual increase in your mortgage interest before and after you released £10K equity for your Father. I would imagine you would of had to confirm the purpose of the loan to the lender though but doesnt matter for HMRC purposes.

seatbeltnoob

foxy-stoat wrote: »

You could ask HMRC if the interest you are paying is an allowable expense, if it is then put the figure in box 17 of your tax return.

The best you can do is go through the hmrc.gov.uk tax documentation. If you ask a rep they will always err on their side if there is doubt (i.e. it is not an allowance expense). But I have never heard of HMRC giving any tax advice to people.

That is what accountants are for.

mcpitman

Aia wrote: »

no, this would have no concern to the lender

So what reason did you give them for the extra borrowing?

Suarez

Intrest on personally loaned money would not qualify for tax relief. The money would have to be used to buy shares or lend money to a company which you have shares in. There are other rules (Check HMRC site) but loaning money to a relative isn't one of them.

Aia

thank you all for your replies.I will speak to an accountant.