Advice please

Mrs_pbradley936

If I loan my son an amount 56K and he agrees to pay me back (with interest) at so much a month is that classed as an investment? Would that be regarded as income for tax purposes? He will be paying me back at about £380 per month.

I have already been talking about the wisdom of it all in the Silver Savers thread and now having decided to go ahead I need to know about the practicalities.

tradetime

Firstly I am not a tax expert, and you should probably consult a chartered accontant, but yes I would say, technically, the interest is taxable, assuming you are a tax payer.

Oblivion

Likewise, I'm no tax expert but I did have to make an enquiry of a similar nature a while back. The answer I got from a tax savvy accountant was that any interest paid to you is "money paid for the use of money". As such it will be taxable as interest at the current savings rate i.e. 20%.

Now whether, being an internal family matter, you choose to notify the tax man of the arrangement is for you and your conscience to decide

There are of course other considerations such as whether you want to make it official with a written agreement, whether you trust your son to repay you etc., but that again is a personal decision only you can take.

Dave.

tradetime

Now whether, being an internal family matter, you choose to notify the tax man of the arrangement is for you and your conscience to decide

LOL, I didn't know whether to say that or not, not wanting to steer anyone to the darkside, but sure was thinking about it.

For the OP, I did find this, how helpful, more importantly reliable, I don't know,
http://www.taxationweb.co.uk/forum/discuss.php?id=19801

Oblivion

tradetime wrote: »

LOL, I didn't know whether to say that or not, not wanting to steer anyone to the darkside, but sure was thinking about it.

I don't know, it seems the older I get, the more anarchic I seem to become.

Since I object in principle to the tax man taxing my interest on earned income I've already been taxed on, I'm now firmly in the camp of 'what the taxman doesn't see, he won't grieve over'. :rotfl:

Dave.