money to sister towards her isa is classed as ..

moneysavingaddict07

Afternoon moneysavingexperts..
Can on-one advise me the following..
My sister is old enough to have her own ISA account. I thought I will lend her £3000 to start off with then another £3000 next tax year and continue to carry on funding her accounts every year until she finishes uni and finds herself a job.
Am I liable to any tax for lending her this money?
I have copy and paste some information from the HMRc website on this matter.Is this out of date? Is there a maximum amount you can give to someone in your family?

Thanks.

What assets do not lead to a CGT charge?

Some assets are exempt. For example, you will not have to pay CGT on

• your private car
• cash held in sterling
• any foreign currency held for your own or your family's personal use
• jewellery, paintings, antiques and other personal effects that are individually worth £6,000 or less (if you have a set, for example a set of chess figures - you do not pay CGT if the value of the set as a whole is £6,000 or less)
• Savings Certificates, Premium Bonds and British Savings Bonds
• UK Government stocks ("Gilts")
• assets held in an Individual Savings Account (ISA) or Personal Equity Plan (PEP)
• betting, lottery or pools winnings
• personal injury compensation.

http://www.hmrc.gov.uk/leaflets/cgtfs1.htm

I dont think this comes under the Inheritance tax, well it certainly won't be over £300,000.
Many thanks

debbie42

Just re-read your post here.

It depends if you're expecting interest or not?
My understanding is that as long as it's a loan with no interest then there are no tax implications for you. If you do get any interest then I think it's classified as interest savings/income and not CGT, but I've never had to do this myself.

debbie42

Just found this link, which may be interesting:
http://www.moneysorter.co.uk/private_loans_family_friends.html

CLAPTON

if she pays you interest then it counts as part of your income and you need to declare it and pay income tax

there is no cgt to pay

moneysavingaddict07

Sounds like it's a grey area. I won't be asking for interesting for a long time. I guess in four year's time, so it all seems legit as long as I declare it as earnings outside my salary.

CLAPTON

I wouldn't call it a grey area... if she pays you interest then income tax is due, if she doesn't then its not.

Mind you, its not clear how the HMRC would know about a family arrangement