Parents supported me, but looking to upsize!

getmore4less

enthusiasticsaver wrote: »

He is repaying a loan or technically a gift as there is no loan agreement so who would he declare that to? His parents are not receiving interest as such.

The OP is paying interest on the loan from their parents.
the payments are not reducing the capital(according to what they have written here)

The parents have an obligation under self assessment to declare that income.

enthusiasticsaver

Genuinely interested as to how that can be documented though as no loan agreement. If you read the DFW forum many have borrowed from relatives and I would hazard a guess none are reporting it as interest received. What if the parents just say that the son is repaying a gift at the rate of 1% of the capital and they are repaying their own mortgage themselves? I am not saying that is right by the way but on the scale that many people support their older children I would bet very few put it on self assessment forms.

getmore4less

There are going to be loads involved in tax evasion making up lies when needed to cover their tracks.

enthusiasticsaver

getmore4less wrote: »

There are going to be loads involved in tax evasion making up lies when needed to cover their tracks.

It depends on how the loans were structured. HMRC rules say interest free loan repayments are free of tax to the lender. If the minimum monthly repayment is treated as a repayment to the capital then no tax is liable no the loan.

silvercar

Some comments are bordering on the ridiculous.

If my mother buys me a coffee while shopping will that be considered inheritance tax evasion in years to come?

enthusiasticsaver

silvercar wrote: »

Some comments are bordering on the ridiculous.

If my mother buys me a coffee while shopping will that be considered inheritance tax evasion in years to come?

I agree it is ridiculous and impractical for everyone who has gifted or loaned their offspring money to consider that this is liable to tax.

In your example I would assume your mum buys you a coffee out of her everyday income so not subject to inheritance tax. If she buys you a £140k flat out of her savings to reduce her estate then she has to live 7 years to avoid inheritance tax (should her estate be liable to it). What getmore4less is talking about though is income tax and this is something which needs to be considered when loaning relatives money especially if they are charging relatives interest on said loan.

getmore4less

silvercar wrote: »

Some comments are bordering on the ridiculous.

If my mother buys me a coffee while shopping will that be considered inheritance tax evasion in years to come?

Potentially if it exceeds the exempted gifts of which there will be a few categories it could fall.

The op has said they are paying Interest to their parents.
No exemptions apply.

John-K_3

enthusiasticsaver wrote: »

He is repaying a loan or technically a gift as there is no loan agreement so who would he declare that to? His parents are not receiving interest as such.

How on Earth can you reach that conclusion? They gave lent him money, and he is paying it back with interest.

We see this sort of thing a lot on here, a clear-cut situation but people thinking that you can just declare it not be by fiat. People repay loans and swear blind it was a gift, and so on.

Do people honestly think that you can just deny the reality of a situation, and if you do it with a straight face it has to be accepted?

Could my company just declare my salary a gift to let me avoid tax?

Sea_Shell

Just to clarify...is it correct that any interest charged on a family loan, IS counted for income tax purposes, of the lender?

davidmcn

Sea_Shell wrote: »

Just to clarify...is it correct that any interest charged on a family loan, IS counted for income tax purposes, of the lender?

Interest received from loans is taxable under Income Tax. Being family isn't relevant (in the same way that you pay normal tax if you're employed by a relative).