Borrowing to invest

duffrocket

Hi from a newbie.

I've searched the forum and the Internet generally but can't find a definitive answer, so I've come here.

Can I borrow money, say £3K from my cohabiting partner to legally invest in my cash ISA?

I already have the ISA setup but I will not be able to invest the full £20K allowance from my own funds before the deadline ends in April 2024.

I intend paying my partner back as early as I can within the next tax year. She has invested the full amount in her own ISA for this tax year.

When I opened the ISA the bank asked me if the money I was investing was my own. It was new money of my own held with a different bank; I also transferred in an ISA from the same different bank to get a better rate. Their question got me wondering about the legality of borrowing to invest in ISAs

eskbanker

In practical terms there shouldn't be any issue, but are you likely to be using all of your 2024/25 £20K allowance?

Albermarle

invest in my cash ISA?

In the usual terminology you Save in a cash ISA , and invest in a Stocks and Shares ISA.

Once someone gives you money, it is then your money ( even if you intend to pay it back )

The catch is really for your partner, in that you might not pay them back.

duffrocket

eskbanker said:

In practical terms there shouldn't be any issue, but are you likely to be using all of your 2024/25 £20K allowance?

Thats good.
I doubt I'll use the full 2024/2025 allowance but you never know!!!

Albermarle said:

invest in my cash ISA?

In the usual terminology you Save in a cash ISA , and invest in a Stocks and Shares ISA.

Once someone gives you money, it is then your money ( even if you intend to pay it back )

The catch is really for your partner, in that you might not pay them back.

Err, if I don't pay it back I could find myself out on my earhole, we live in her house

Angelica123

I guess the question is whether it makes any sense to even do this. Is your partner earning over the personal savings allowance and liable to pay tax on interest? If she is, then it may make sense for her to transfer the money (but with a huge risk to her as she would have no way to get the money back if you two had a falling out). If she is not paying tax on her savings interest - then there is no benefit to her paying the money to you - you would have to ideally pay her back including the interest that she has lost by it not being in her savings account, so there would be no net benefit to you. 

Is there a particular reason you are worried about not maxing out your ISA allowance? 

masonic

duffrocket said:

Albermarle said:

Once someone gives you money, it is then your money ( even if you intend to pay it back )

The catch is really for your partner, in that you might not pay them back.

Err, if I don't pay it back I could find myself out on my earhole, we live in her house

If something should happen to you, you might not be capable of paying her back. Likewise, if your relationship breaks down, you might consider keeping the money given you would probably want to find somewhere else to live. Over a very short term, these risks might be minimal, but there isn't much protection for her in what has been discussed so far.

jimjames

duffrocket said:

I intend paying my partner back as early as I can within the next tax year. She has invested the full amount in her own ISA for this tax year.

In just over 3 months time she'll be able to put the full amount into another ISA in her own name, it doesn't really seem worth the hassle for £3k to do what you are suggesting. Does she have more than £17k outside an ISA already, if so is £3k the only amount you can get into your ISA before hitting the limit?