My client has recently had an offer accepted on a property. Their existing property is on the market and any sale will not complete in time, so they need to fund the deposit payment on the new property from other sources.
They are trustees of an investment bond for two of their children. They have asked me whether, if the bond is closed, their children can lend them the proceeds of the bond to fund the deposit payment, without tax implications.
I do not believe there would be any tax implications on the child-parent loan (my client is concerned it would be treated as taxable income, but this is not the case for a loan). My client plans to repay his children as soon as the existing house is sold.
I assume that there would also be no tax implications on any interest earned by the children once the loan had been repaid by the parents, as this money was originally an inheritance and did not come from the parents (so wouldn't be caught by the >£100 interest rule)
There is obviously the consideration as to whether now is the right time to liquidate the bond, but they had planned to do so in the next couple of years in any case to fund university fees.
Are there any other considerations that I need to be aware of?
Thank you in advance for any thoughts.