Unexpected cash gift

exponential

Hi guys

To those interested in this subject.
My friend has spoken to her investment bond provider and has been told that any withdrawal of 39K and over will attract a tax rate if 40%.
As I am not an accountant and have no knowledge of savings snd investments, I did not consider this fact when I was offered the necessary funds to clear my debt.

She is still willing to loan the money which is great but, in light if the recent information, it appears the most cost effective way of doing it is to loan me the money across two tax years.

So, she withdraws 34000 (give or take) this tax year and the same amount next tax year.

She wants to withdraw her entire investment pot anyway so she'll be liable for the tax anyway.

She's had this investment for 12 years. I didn't consider the tax to be fair.

Any input would be greatly appreciated.

Thanks.

JohnRo

My experience of lending money to family has been very different and came as quite a shock. It has soured things beyond repair.

There's just something that happens to some people's psyche that's difficult to quantify and for me at least difficult to understand. You won't know until the deed is done and the reality has changed.

The relationship switches from one of salvation and gratitude, to one of being owed and the person helped (in my experience) becoming resentful and 'weird'.

I hope you honour the debt and the very generous offer. If so all power to you.

Snow_Dog

A very generous friend you have - its always good to help good friends and family.


By my reckoning, you said £800pcm for 6 years, that actually works out at an interest rate by my reckoning to be about 5%.


For that sum of money I really would do as others have said, get an agreement in writing, it protects both of you.

Alexland

JohnRo wrote: »

The relationship switches from one of salvation and gratitude, to one of being owed and the person helped (in my experience) becoming resentful and 'weird'.

The same can happen when you rent a room to a friend where, even at a low rate, they can start to resent you being their landlord and having to pay you every month. You become part of the system keeping them under subjection and hardship.

Alex

exponential

JohnRo wrote: »

My experience of lending money to family has been very different and came as quite a shock. It has soured things beyond repair.

There's just something that happens to some people's psyche that's difficult to quantify and for me at least difficult to understand. You won't know until the deed is done and the reality has changed.

The relationship switches from one of salvation and gratitude, to one of being owed and the person helped (in my experience) becoming resentful and 'weird'.

I hope you honour the debt and the very generous offer. If so all power to you.

That's sad to hear!

We can all say "that won't happen to me/us" but I guess I do have to take your concerns into consideration.
I truly feel that this won't affect our relationship and think that it will only strengthen our friendship as this is truly life changing for us.
We can finally start to look to the future instead of fearing it.

As far as the repayment.... Not paying is something I haven't given any thought to.
I intend to put together a contract which will be witnessed by a third party and, although I know this contract won't be legally binding, I intend to fulfil it.
It isn't in my nature to pull the wool over somebody’s eyes, my conscience won't allow it. Nor will my wife for that matter!

exponential

Snow_Dog wrote: »

A very generous friend you have - its always good to help good friends and family.


By my reckoning, you said £800pcm for 6 years, that actually works out at an interest rate by my reckoning to be about 5%.


For that sum of money I really would do as others have said, get an agreement in writing, it protects both of you.

She wants us to be able to live a little, something we haven't been able to do for a very long time.
She wants £600 a month for the first 12 months rising to £800 for a further 5 years.
6 years total. I will then continue to pay £800 for 5 months at the end of the term as a thank you for doing what she's done for us.

The more I think about it, the more I can't believe this is happening. Its crazy.

Like me wife said last night, we would've been paying this debt until we die. A terrible thought.

xylophone

although I know this contract won't be legally binding,

It seems to me that a signed and witnessed agreement would be legally binding.

justme111

Will she be charged any tax if she takes money over 2 years ? Given that she would be charged 40% if she withdraws it in one year high chances of her being charged 20% or so if she does over two years and it stops becoming so attractive proposition because I do not see how you could accept qorh a straight face 10k and return 10 I if you knew it costed your friend 12 k to give them to you.
Apart from that - have you ever questioned the set up in which for your family to be solvent you have to rely on your mother in law childcare while spending? From reading your first post I thought your wife had to stop work to care for her mother and it transpired it was her mother not being able to look after your children.

exponential

Hi guys.

Just a quick update.

So she has withdrawn the funds from the bond. She hasn't paid tax as that is taken each year automatically apparently?

Anyway, she went to the bank (Nat West) today with my wife to complete the transaction to our account.
The branch manager got involved and basically refused to carry out the transaction stating that she suspects we are trying to scam her out of her money and threatened to call the police.
The manager then started asking her a lot of personal questions like "what would your late husband think of all this" etc etc.

Absolutely disgusting behaviour from a branch manager.
We are now seeking legal advice as we aren't sure where we stand now.

Very confusing indeed. :eek:

Sea_Shell

I can't offer any advice, but out of interest how old are they both?