Giving or 'loaning' someone £40,000 -

Grimesey68

My half-sister wants £40,000 from the money my father left me in his will. Am I right in thinking that I won't need to pay any tax (nor she) as long as I don't snuff it in the next seven years? ( I know all the inheritance tax rules and exemptions etc.)

I was thinking of loaning it to her, but was wondering what - for lawful tax purposes - would be considered the minimum repayment terms?

Many thanks

Sea_Shell

Sorry, is she demanding it or are you offering it? If so why would it need to be "lent".

Socajam

I am going to shout at you: DO NOT LEND YOUR HALF SISTER THE MONEY.
I would hate to see you back on here asking how you can get your half sister to repay you this money.
Trust me people are exceptionally nice when they want something. Once that is done, you will see the other side of them. This includes: family and friends.
Let her borrow the money from the bank, because you know what she will have to repay the bank.
Borrowing from you she will think that she is under no obligations to repay you.
If you want your stress levels to escalate lend her the money and see where you will end up.
I am speaking from experience, still waiting for my money, but guess what they are still living their lives as someone without a care.
Finally, ask yourself this question: If I did not have this money, what would my half sister do? Probably borrow from the bank? Therein lies your answer.

Keep_pedalling

Grimesey68 wrote: »

My half-sister wants £40,000 from the money my father left me in his will. Am I right in thinking that I won't need to pay any tax (nor she) as long as I don't snuff it in the next seven years? ( I know all the inheritance tax rules and exemptions etc.)

I was thinking of loaning it to her, but was wondering what - for lawful tax purposes - would be considered the minimum repayment terms?

Many thanks

Not enough information. If you loan your sister the money it stays part of your estate indefinitely only other tax issue is if you charge her interest.

If you gift the money to your sister your estate may pay IHT on that money but only if your estate exceeds you nil rate bands, and we are not privy to that information. If you father died within the last 2 years you can actually take the £40k out of your estate immediately by doing it through a deed of variation. A deed of variation effectively passes the gift from your late father to her.

If you are happy to loan the money, but not worry if you don’t get repaid then go ahead, but if you feel that way why not go the whole hog and make a gift if it?

Grimesey68

Thanks guys - I think I thought that if it were a loan it might be treated differently, but I guess not.

And yes, a deed of variation - I nearly did that at the time, I wish I had now, but she was going to live in the house I inherited and I thought that would be of more help to her (long story including mental health issues, a divorce etc) but I then she felt she couldn't move in, so I ended up selling it earlier this year. Unfortunately we're outside the two years now.

She says she needs the £40,000 to put a deposit on a mobile home while the sale of her and erstwhile husband's house goes through. I can't imagine a bigger waste of money to be honest, but she says she can't afford anywhere else.

It's a mess really

AndyCF

This could be totally wrong however if it is for a set purpose such as a deposit, you could pay it directly possibly rather than give it to her to pay it.

That way if (hopefully they wont) things do go pear-shaped you might have at least "something" you can possibly get back as in partial claim on said mobile home or value of.

^ That is just from reading what you said the monies were for. I cannot really be sure how helpful or useful (or indeed, how legal/binding) it would be!

zagubov

AndyCF wrote: »

This could be totally wrong however if it is for a set purpose such as a deposit, you could pay it directly possibly rather than give it to her to pay it.

That way if (hopefully they wont) things do go pear-shaped you might have at least "something" you can possibly get back as in partial claim on said mobile home or value of.

^ That is just from reading what you said the monies were for. I cannot really be sure how helpful or useful (or indeed, how legal/binding) it would be!

This looks like one of those situations where posters might suggest you give her a personal mortgage with a claim on the sale of the property.

However I haven't a clue how relevant that would be a mobile home and how their purchases are financed. Also I don't even know how wise it would be as it's potentially a depreciating asset. Charging interest is almost bound to lead to a tax bill.

Hopefully someone will be along soon with more knowledge of this area.

edgex

Grimesey68 wrote: »

She says she needs the £40,000 to put a deposit on a mobile home while the sale of her and erstwhile husband's house goes through. I can't imagine a bigger waste of money to be honest, but she says she can't afford anywhere else.

It's a mess really

:eek::eek::eek:

£40k deposit!
You can just about get an actual property for that much.

Why can't she rent somewhere?

Was the estate split equally between you, or did you get the majority?
What's she done with part?