Loan from the bank of mom&dad - taxable?

stefan101

Good morning guys,

So I am looking to get a loan of around 10k from my mom and dad as they will give it to me interest free and I can repay it back at my own pace.

Now, they are not UK residents or citizens, but I am a resident. They will give me this money in cash when I will visit them in a few months as it saves me and them any fees of transferring through banks.

My question and worry at the same time is, do I have to report this money anywhere and tax it ? It has technically already been taxed once, but in a different country. As this is their own savings and earnings.

Will mr tax man know about me depositing 10k into my bank account which I will then spend on home improvement?

Any help will be appreciated. Thanks.

Jeremy535897

There is no tax, but your bank may very well ask questions regarding money laundering, if you deposit a sum of cash of this scale.

theoretica

There are also limits on the cash you can import without reporting to customs, and may be requirements for taking it out of the other country too.  Bank transfer might be the better option. https://www.gov.uk/bringing-cash-into-uk

On-the-coast

No tax issues at all - but I agree with the points the other posters have raised.  Be very careful with that 10k limit (I.e make sure you declare it)  because if your bank starts asking questions it would be difficult to explain if you haven’t. 

I can understand that your parents might be reluctant to use the banking system - although I think the fees would be worth the extra security and traceability. 

Do you have a bank account in your home country?   You could use that for transfer to your uk account?
finally, I’d recommend you have a copy of a letter from your parents explaining that the money is a loan to you - so that you can show it to your bank if asked. 

NorthYorkie

I agree with all the above, and would add that as an 'insurance policy' (that hopefully will not be needed) you should make sure that you should have contemporaneous documentary evidence of the source of the 10K and also of the repayments you subsequently make to your parents. The Revenue are suspicious of large amounts received as cash which are claimed as loans from family members who are not resident in the UK.

Brie

Agreeing with the rest.

I would be very reluctant to travel with that much cash on me - if it was a long flight and was tired and I flushed it, over tipped the taxi, whatever.  And it is very likely to be flagged when you enter the country unless you are very good at smuggling! 

At the bare minimum, a letter explaining from mom and dad, in English or with a certified translation perhaps, a copy of their bank statement to show the source of money being withdrawn from their account along with a cheque in GBP would be my choice.  

I have often brought back a cheque from my mom but for only about £500 but it has taken more than a couple of weeks sometimes to appear in my available funds in my account.  That's one drawn in GBP from a Canadian bank.  If your parents live somewhere farther away or more foreign than that a transfer might be your best option.  And perhaps you need to ask your bank here what they will accept.  Money can't always be transferred depending on the country of origin due to financial sanctions in place.  (e.g. Iran etc)