Loan from family member

00ec25

akkers wrote: »

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

you are not the first, nor last, to think that a specific rule relating only to inheritance tax sets a precedent for "gifts" as a whole

akkers

So. are gifts taxable?

Grimesey68

I've been looking in to this because I supposedly lending or gifting money, and no, there is no gift tax for either giver or receiver. However, if the giver should die within seven years of making the gift, it will be included in the deceased estate and could be subject to Inheritance Tax.

ffacoffipawb

Keep_pedalling wrote: »

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

Investment trusts pay dividends which have a separate allowance?

OEICS pay interest or dividends depending on their underlying investments.

londoninvestor

Keep_pedalling wrote: »

HMRC say the following

So personal loans are not included.

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

Is there a statutory basis for this, or is it a case of gov.uk oversimplifying?

Interest from a privately-made loan is certainly "interest" in the common law meaning of the term, which is the point where tax legislation starts from when defining taxable interest.

Now, the definition of "savings income" in ITA 2007 includes (among other things) "income chargeable under Chapter 2 of Part 4 of ITTOIA 2005 (interest)":
http://www.legislation.gov.uk/ukpga/2007/3/section/18

And that section starts by stating that "income tax is charged on interest" [which AIUI means it in its common-law sense] and then adding some extra things that are treated as interest for tax purposes:
http://www.legislation.gov.uk/ukpga/2005/5/section/369

So this would mean that the PSA covers anything that common law considers as interest.

Totally open to correction by those who know this better than me!

londoninvestor

ffacoffipawb wrote: »

Investment trusts pay dividends which have a separate allowance?

OEICS pay interest or dividends depending on their underlying investments.

Also some income from REITs is treated as income from property.

nick74

londoninvestor wrote: »

Is there a statutory basis for this, or is it a case of gov.uk oversimplifying?

Interest from a privately-made loan is certainly "interest" in the common law meaning of the term, which is the point where tax legislation starts from when defining taxable interest.

Now, the definition of "savings income" in ITA 2007 includes (among other things) "income chargeable under Chapter 2 of Part 4 of ITTOIA 2005 (interest)":
http://www.legislation.gov.uk/ukpga/2007/3/section/18

And that section starts by stating that "income tax is charged on interest" [which AIUI means it in its common-law sense] and then adding some extra things that are treated as interest for tax purposes:
http://www.legislation.gov.uk/ukpga/2005/5/section/369

So this would mean that the PSA covers anything that common law considers as interest.

Totally open to correction by those who know this better than me!

My understanding is that yes, you are correct. There is no statutory basis for excluding interest from loans between private individuals from the personal savings allowance. It does arguably fall into the category of 'peer to peer lending' in any case. There is nothing in statute which says that peer to peer lending has to be via an intermediary such as Zopa etc.

tebthereb

Agreed I think it a mistake to take HMRC’s list of what’s included as being a definitive list.