Can we lend our son money?

Kaspah

Dear forum,
Can anyone advise me please, we wish to loan our son £45k can we do this without paying tax?
What would be the best way to do it?
Thank you

TadleyBaggie

Would you be charging interest on the loan?

Kaspah

Hi,
No we wouldn't, but could if it made it possible!
Thanks

Ebe_Scrooge

If you're not charging interest then there are no tax issues.


Where there may well be issues, however, is in enforcing repayments. This forum is littered with tales of people lending money to friends and family, then coming unstuck when the loan isn't repayed. The general advice is to look upon it as a gift, with no expectation of it being repayed. If it is repayed then that's a bonus.

bengalknights

As long as you get a "contract" stating its a loan and not a gift then all is well.

Its when its a gift and you if you pass away within a certain period where there is tax due

iolanthe07

If you were to die within seven years then Capital Trtansfer Tax may be payable on a sliding scale, but you really need to take professional advice for a sum as large as this, imho.

bargainbetty

Please also note that if you are lending this sum of money to your son to assist in a house purchase, the mortgage lender may insist on seeing a statement that the funds are a gift, not a loan.

If the sum is a loan, they may consider it a debt liability for the purposes of arranging his mortgage and he may not be offered the sum he needs to purchase a property.

MEM62

Kaspah wrote: »

We wish to loan our son £45k can we do this without paying tax?

I am struggling to see why you would think you would pay tax on a sum of money that you are lending to your son.

Gambler101

MEM62 wrote: »

I am struggling to see why you would think you would pay tax on a sum of money that you are lending to your son.

I dunno, we will be paying tax on the air we breathe soon!

enthusiasticsaver

If you are gifting your son money and you die within 7 years then inheritance tax may be liable on a sliding scale depending on size of your estate (not capital gains as someone said up thread). If you are loaning him money and not making a profit (ie charging interest) then there is no tax to pay either by him or by you.

If this is to buy a property then the bank needs to know he will have an additional loan to pay in addition to the mortgage if applicable and you need to state you have no interest in the property.

The_Real_Cheddar_Bob

gift it. he is your son