My mother loaned me £25,000 to help purchase a property. She did not want any interest in the property and so her name is XXXXX XXXXX the deeds. She did not want the loan repaid as she said it would be part of my inheritance and she did not want any interest to be paid for the same reason. I drew up an agreement of the terms of the loan and both my mother and I signed it. This was done so that it could be placed with my mother's will which is in the possession of my brother-in-law who is the named executor, in order that he would know that my sister was entitled to £25,000 more than me.However, he has told my mother that he thinks that this is illegal and that interest and tax on the loan will have to be paid as it is the law. I know that transactions such as company cars and loans to employees by employers are now, and have been for some years, classed as benefits-in-kind and the employee has to pay tax. Does this apply to my situation. My brother-in-law has no legal expertise. If it does, what rate of interest should be used - the rate applicable at the time the loan was made or the rate applicable when I inherit?I look forward to hearing from you and thank you for your assistance.
System of Law: England-and-Wales
Thanks for your question. Please remember to rate my answer SMILEY FACE OR ABOVE so that I am credited for my time.No.It can count as a gift.If she survives for more than 7 years from the date of the gift no tax will become due.If he dies within the time of the gift (7 years) then it can be included as part of the estate for inheritance tax purposes. Please remember to click *** SMILEY FACE *** or above so that I am credited for my time. The question does not close and you can ask follow ups. Important: If you feel the need to rate as one of the lower two scores, it counts as negative feedback so please reply to me via the REPLY with any further questions you may have. I will be happy to assist you further.
Called to the Bar in 2007
I'm just following up with you to see how everything is going. Did my answer help?UK-Justice
Yes, it confirmed my understanding of the situation and I can now pass this information on to my mother with confidence that it is correct. Thankyou for your assistance.
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