Not a gift, no a loan?!?
Discussion
A relative wants me to look after a 5-figure some of money for him for an unspecified period. He's not interested in interest, just wants a safe haven where he can't spend it.
It will be useful for me to reduce the interest payments on my offset mortgage.
Are there any tax implications for me, other than IHT?
It will be useful for me to reduce the interest payments on my offset mortgage.
Are there any tax implications for me, other than IHT?
Depending on the areas you operate in, there could be Money laundering implications. A couple of years ago, a solicitor received a six month jail sentence for "minding" a sum of money on behalf of one of his clients. He had received no benefit from the deal apart from a small amount of interest (which he declared correctly for tax purposes) and the pleasure of being nice to one of his clients.
Before accepting the money, I would be inclined top ask the individual "why" he wants to make this arrangement.
Before accepting the money, I would be inclined top ask the individual "why" he wants to make this arrangement.
If you are using it for your benift (reduce mortgage) then how is it NOT a loan? You need a simple agreement stating that its an interest free loan redemable when he wants. IHT is not relevant as its a loan not a gift.
Although...as Eric says....if your relative is a baddie then you may come a cropper.
Although...as Eric says....if your relative is a baddie then you may come a cropper.
LeoSayer said:
Thanks everyone. I agree that it will be a loan in effect.
I am satisfied that the source of the money is legitimate!
I'll just have to restrain myself not to invest it in a GT3 or similar.
Have you taken reasonable steps to ensure this. Merely asking the realtive "Is this kosher?" will not stand up in court.I am satisfied that the source of the money is legitimate!
I'll just have to restrain myself not to invest it in a GT3 or similar.
Eric Mc said:
LeoSayer said:
Thanks everyone. I agree that it will be a loan in effect.
I am satisfied that the source of the money is legitimate!
I'll just have to restrain myself not to invest it in a GT3 or similar.
Have you taken reasonable steps to ensure this. Merely asking the realtive "Is this kosher?" will not stand up in court.I am satisfied that the source of the money is legitimate!
I'll just have to restrain myself not to invest it in a GT3 or similar.
If this is not kosher, you could VERY EASILY end up in PRISON for Money Laundering.
I wouldn't risk it.
Tell him to put it into premium bonds or something.
This stinks.
The thing is, I know the relative and his finances pretty well as he comes to me for advice, such that I am able to provide. He has a deep distrust of anyone in the Finance industry, except me.
He got into serious debt around 10 years ago and I helped him plan how to pay this off. Through long hours of work he did that and increased his pension as well. When he turned 60 he got lump sums from his pensions and I helped him set up ISAs and other savings accounts to get the best interest rates.
Of course, I have no proof that this is the source of money of this as he has all the documentation, but I could certainly get the proof if required.
Now that he is thinking of stopping work, he doesn't feel he can be trusted with such a large amount of money under his control and he is earning sod-all interest on it anyway. It will also prevent him from 'loaning' the money to someone less trustworthy than me.
One thought crossed my mind...by lending/giving the money to me, could his reduced savings enable him to claim enhanced benefits from the DSS?
I'm going to refuse, but am trying to work out exactly what his motives might be.
He got into serious debt around 10 years ago and I helped him plan how to pay this off. Through long hours of work he did that and increased his pension as well. When he turned 60 he got lump sums from his pensions and I helped him set up ISAs and other savings accounts to get the best interest rates.
Of course, I have no proof that this is the source of money of this as he has all the documentation, but I could certainly get the proof if required.
Now that he is thinking of stopping work, he doesn't feel he can be trusted with such a large amount of money under his control and he is earning sod-all interest on it anyway. It will also prevent him from 'loaning' the money to someone less trustworthy than me.
One thought crossed my mind...by lending/giving the money to me, could his reduced savings enable him to claim enhanced benefits from the DSS?
I'm going to refuse, but am trying to work out exactly what his motives might be.
LeoSayer said:
The thing is, I know the relative and his finances pretty well as he comes to me for advice, such that I am able to provide. He has a deep distrust of anyone in the Finance industry, except me.
He got into serious debt around 10 years ago and I helped him plan how to pay this off. Through long hours of work he did that and increased his pension as well. When he turned 60 he got lump sums from his pensions and I helped him set up ISAs and other savings accounts to get the best interest rates.
Of course, I have no proof that this is the source of money of this as he has all the documentation, but I could certainly get the proof if required.
Now that he is thinking of stopping work, he doesn't feel he can be trusted with such a large amount of money under his control and he is earning sod-all interest on it anyway. It will also prevent him from 'loaning' the money to someone less trustworthy than me.
One thought crossed my mind...by lending/giving the money to me, could his reduced savings enable him to claim enhanced benefits from the DSS?
I'm going to refuse, but am trying to work out exactly what his motives might be.
He should lock the money into an investment which he can't touch.He got into serious debt around 10 years ago and I helped him plan how to pay this off. Through long hours of work he did that and increased his pension as well. When he turned 60 he got lump sums from his pensions and I helped him set up ISAs and other savings accounts to get the best interest rates.
Of course, I have no proof that this is the source of money of this as he has all the documentation, but I could certainly get the proof if required.
Now that he is thinking of stopping work, he doesn't feel he can be trusted with such a large amount of money under his control and he is earning sod-all interest on it anyway. It will also prevent him from 'loaning' the money to someone less trustworthy than me.
One thought crossed my mind...by lending/giving the money to me, could his reduced savings enable him to claim enhanced benefits from the DSS?
I'm going to refuse, but am trying to work out exactly what his motives might be.
I'd be very concerned about this. The posting above sounds like a witness statement in a fraud case which won't be believed!
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