Loan repayments from my partner and tax

Bennington40

Evening all,

I will be lending my partner £20,000 to pay off debts. I have researched how to create a loan agreement and carefully considered whether to go ahead after lots of frank conversations. My remaining questions are on how to organise the repayments of £350 per month over 5 years. Could someone confirm I will be taxed on these (basic rate tax payer) as they will exceed the PSA? And how is it best to receive the repayments - simply into my current account for me to then move back into my savings account, straight back into the savings account the loan will come from or into a new ISA from April, or any other best ways?
Thank you

TadleyBaggie

If there is no interest being repaid, there is no tax implications.

Grumpy_chap

https://forums.moneysavingexpert.com/discussion/6654057/loan-repayments-from-my-partner-and-tax

I think you are saying that you will lend your partner £20k.

Your partner will pay you back £350 per month over 5 years. 350 x 12 x 5 = £21k.

That means £1k interest over the 5 year period so, unless there are other interest receipts, that will not exceed the PSA.

You might find the whole process a lot simpler if you simply accepted your partner paying you back the original amount and stopping once the £20k has been reached rather than any interest.

How long have you known this partner?

Is this an established relationship with a realistic prospect of seeing out the five years?

What steps is your partner taking to ensure they don't reach the same scenario with regard to debt in the future?

MEM62

There are no tax implications.

With respect to your decision to extend the loan, I am sure you have given it due thought. However, bear in mind that, in real terms, the loan agreement serves only to remind the two of you of the terms of the arrangement. It will not serve as a vehicle to recover any remaining balance if your partner stops paying for any reason.