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Loan to son payed back!
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Hello, 4.5 years ago my wife and I obtained a loan for £25k to help our son buy out his ex-girlfriend from the house he was living in and to help him buy the house. He has now just sold his house and will be paying us back the money.
where do I stand with the £25k with tax? I am a 40% tax earner and my wife a homemaker,
is there any issues with receiving monies back ?
where do I stand with the £25k with tax? I am a 40% tax earner and my wife a homemaker,
is there any issues with receiving monies back ?
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Comments
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It's a gift you gave him that he's now giving back. It's not income. It's not really a loan from you to son if there was never any interest charged by you/wife to him and if there was interest that would be the only bit that would have been income to potentially be taxed. That said you could claim that interest you paid the bank for the loan was an expense to put against any income.
So not a problem but if you're worried about it get son to put it in your wife's account rather than in yours or a joint one.I’m a Forum Ambassador and I support the Forum Team on Debt Free Wannabe, Old Style Money Saving and Pensions boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.
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No tax implications if he's repaying you the amount you loaned him.
Presumably you've taken the hit on the loan interest as a gift to your son?1 -
Hi, many thanks for your comments and great advice. We can rest easy now and enjoy.0
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Its the repayment of a loan. You'd be liable for tax on any interest that you charged son. The principal amount is just returning what you gave out so no tax implication on that part.
^ No. Loans can be interest free, that doesn't make it a gift if son was supposed to pay it back. Agree the principal return is not income and hence tax free. The interest expense might be could be claimed against interest income from that loan, but not from any other income.Brie said:It's a gift you gave him that he's now giving back. - It's not income. It's not really a loan from you to son if there was never any interest charged by you/wife to him and if there was interest that would be the only bit that would have been income to potentially be taxed. That said you could claim that interest you paid the bank for the loan was an expense to put against any income.
So not a problem but if you're worried about it get son to put it in your wife's account rather than in yours or a joint one.1
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