Lending money personally - advice

P

ppbb

Registered User
Messages
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I'm thinking of lending money.
Reason I have the ability to do it and it would make more for me this way than if I leave it in a std current acc.
If I agree terms so the payback is over an agreed period of time?
Is there any tax implications on this for either party?
Example lend 80,000 over 10 yrs let the repayments be paid into a bank account nominated.
Any issues with this?
 
I would just point your prospective clients in [broken link removed] or , although they probably don't log on here, mores the pity
 
Don't you have to be licensed to lend money? And I'm sure that there are tax implications if you are doing a significant amount of business in this area.
 
This is would be agreement between father and son one trying to help out the other.
 
I assumed that you were talking about going into business or something like that. I'm not sure what the letter of the law is on it but I suspect that Revenue don't really bother themselves with loans between family members such as this. In any case you could always structure it as a gift from the father to the son and then a series of gifts (repayments) back to the father all covered by gift tax exemptions. I am assuming that this sort of approach is legit but if not then I am not suggesting that you do anything underhand (e.g. illegal tax avoidance or tax evasion).
 
ppbb said:
This is would be agreement between father and son one trying to help out the other.
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I too am sorry, i misunderstood your ceist, perhaps due to the phrasing
 
ppbb said:
Reason I have the ability to do it and it would make more for me this way than if I leave it in a std current acc.
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Quote This is would be agreement between father and son one trying to help out the other.

Which is it - are you giving him free money or are you charging him interest ie making money out of giving the loan as your original post suggests?
 
He is quite happy to pay what I ask and its a lot less than the bank would charge him for eg a std mortgage and more than I would get from having the money in a std acc.
Seems to make sense but we don't understand all this financial stuff.
 
ppbb said:
He is quite happy to pay what I ask and its a lot less than the bank would charge him for eg a std mortgage and more than I would get from having the money in a std acc.
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I don't see how...

You could be earning 3.2% (gross) on your money with the likes of RaboDirect.
He could probably get an ECB tracker mortgage for about the same % APR, or a 3-year fixed rate of 3.45% (APR 3.5%) from NIB — and then he'd get tax relief on his interest payments, bringing the 'real' cost of the loan down further.

If you lend him the money at anything less than the rate of inflation, you'd effectively be 'losing' (i.e. giving him) money. Anything above 3%, and you wouldn't really be doing him any great favours...
 
ppbb said:
He is quite happy to pay what I ask and its a lot less than the bank would charge him for eg a std mortgage and more than I would get from having the money in a std acc.
Seems to make sense but we don't understand all this financial stuff.
Click to expand...

DrMoriarty said:
I don't see how...
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Only circumstances I can think of might be if the the person receiving the money had a bad credit record and could only access a mortgage at the higher rates offered by a few institutions for such persons.
 
I would agree with Rainy Day on this point, I have seen family fall out over lending of money by family members to each other. YOU MAY ACTUALLY LOSE OUT bigtime if the money isnt repaid by your son etc
 
no probs with anything here all good advice!
Get your solicitor to draw up a contract tho' twould be a good learning curve for your son, explain it is for ye're both best interests and if he gets snotty about it then......why give him the cash, cos it could deteriorate later..
 
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