Loan to Parent from Son_Tax consequences

J

JQ2002

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Query,

Current climate has resulted in cashflow problems for parent's business.

Son is in stable, secure job and has savings which he wants to loan to parent to get them over cashflow problem.

Currently, amount lent to parent is 3k. More maybe be lent over the coming months.

Loan will be repaid in time by parent. Also loan is clearly itemised on bank statement as "loan".

Is there potential tax consequences for son?
 
Check whether sole-trader or company? In company decide to treat as director loan of parent or as a creditor.

Is the most recent accounts or statement of affairs avaiable

Maybe son would want to do some check on parent's business to see that money is not going down a black hole( basic due dilegence) Why would business need money now? Is thier other costs that can be cut.

When their is close relationships involved a lot of the time people whether sons/parents/ friends dont get the money back and some afraid or shy about looking for it back

To loan money to any one- You want to be able to ask yourself would it have any effect on your own cashflow if you got nothing back?

Many people who receive loaned money in this way find they now have a person to get money off and less likely to take responsibilty for their own finances and keep going back till the well is dry and they could be also getting loans from a number of people you might be unaware of.

From posting we do not know enough about business to suggest whether it is good to give loan.
 
Business is farming, cashflow for next 2-3 months is tight but picks up later in year following the sale of stock, tillage crops etc. Cashflow is very seasonal in this sector.

Parent is monitoring business, cashflow and has cut costs (wages etc).
 
Should be ok to loan as they should get a couple of large lump sums in due course.

Farming would be a different type of business to main stream business due to seasonal aspect of money coming in.
 
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