Loan from family member

akkers

I am borrowing some money (£18000) from a family member to pay off a debt.


In terms of tax implications, should we document this? Or can it be just shown as a gift. If we show it as a gift will I be taxed?

Keep_pedalling

There is no gift tax in the UK. The loan should be documented with the terms of payment, if for no other reason than to make sure the lender’s executor is aware of the loan should he die before it is repaid.

Tax is only an issue if the lender is charging you interest.

xylophone

Is it a loan? That is, you are required to repay it?

Set up a loan document and have both parties sign and date it. Then each party should keep a copy with his financial papers.

It is an asset of the lender's estate and a set off against yours should you die before repayment.

If the lender is charging interest, then he should report this to HMRC as it does not count as savings interest for the PSA.

Rainbowgirl84

xylophone wrote: »

Is it a loan? That is, you are required to repay it?

Set up a loan document and have both parties sign and date it. Then each party should keep a copy with his financial papers.

It is an asset of the lender's estate and a set off against yours should you die before repayment.

If the lender is charging interest, then he should report this to HMRC as it does not count as savings interest for the PSA.

That's assuming they are both male!:D

xylophone

That's assuming they are both male!

When I was being taught English, it was customary to use the masculine possessive adjective / pronoun when the sex of the persons concerned was unknown.

00ec25

xylophone wrote: »

When I was being taught English, it was customary to use the masculine possessive adjective / pronoun when the sex of the persons concerned was unknown.

that was then, this is now

xylophone

this is now

Alas, I'm old and past it......:eek:

tebthereb

xylophone wrote: »

If the lender is charging interest, then he should report this to HMRC as it does not count as savings interest for the PSA.

Why does this interest not count as savings interest for the PSA? Haven’t come across that

Keep_pedalling

tebthereb wrote: »

Why does this interest not count as savings interest for the PSA? Haven’t come across that

HMRC say the following

Savings covered by your allowance
Your allowance applies to interest from:

bank and building society accounts
savings and credit union accounts
unit trusts, investment trusts and open-ended investment companies
peer-to-peer lending
trust funds
payment protection insurance (PPI)
Your allowance also applies to interest from:

government or company bonds
life annuity payments
some life insurance contracts

So personal loans are not included.

https://www.gov.uk/apply-tax-free-interest-on-savings

AnotherJoe

akkers wrote: »

I am borrowing some money (£18000) from a family member to pay off a debt.
In terms of tax implications, should we document this? Or can it be just shown as a gift. If we show it as a gift will I be taxed?

There are no tax implications. Do not put it down on any tax returns, at best it will complicate things at worst they will make a mistake and think it's income.
As said document it privately with a signed agreement in case of death.

akkers

Thanks folks.
I thought any gift above £250 was taxable.