Soldato
Pay him the money back, then withdraw from your bank whatever interest would have accumulated and hand it over to him ? 
Family Loans.
- Thread starter BennyC
- Start date
Caporegime
Benny
Say you borrowed £40k and paid him the 'interest' (gift) annually. To even get near the £3k per annum that you can pay your brother as a 'gift' tax free (£6k if you didn't pay him anything the previous year
), you'd have to be borrowing from him at an equivalent rate of 7.5%. If your brother charged you this much, you might as well get a commercial loan / mortgage @ 5%, or whatever's available on new deals.
Not to mention the fact that if you survived a gift payment of say £10k by seven years, your brother wouldn't be liable for any inheritance tax anyway. Even if you died, after year three, inheritance tax is reduced anyway.
In other words, agree a 'fee' with your brother and it's very unlikely to have any tax implications...so just pay him what you both agree.
Say you borrowed £40k and paid him the 'interest' (gift) annually. To even get near the £3k per annum that you can pay your brother as a 'gift' tax free (£6k if you didn't pay him anything the previous year
), you'd have to be borrowing from him at an equivalent rate of 7.5%. If your brother charged you this much, you might as well get a commercial loan / mortgage @ 5%, or whatever's available on new deals.Not to mention the fact that if you survived a gift payment of say £10k by seven years, your brother wouldn't be liable for any inheritance tax anyway. Even if you died, after year three, inheritance tax is reduced anyway.
In other words, agree a 'fee' with your brother and it's very unlikely to have any tax implications...so just pay him what you both agree.
This. If he is offering the loan then he will have already calculated in his mind that helping his brother out is worth more to him than interest on the loaned money. Just make sure he knows it is appreciated and of course, do pay him back.
Soldato
- Joined
- 3 Mar 2008
- Posts
- 2,566
when the draw down for the money for the house comes, get your brother to wire the money to the solicitors account.
then set up a standing order to pay your bother x amount every month for the capital , give him the interest payments in Cash.
that way he will not have to pay income tax on his "earnings"
easy
then set up a standing order to pay your bother x amount every month for the capital , give him the interest payments in Cash.
that way he will not have to pay income tax on his "earnings"
easy
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