Share this content

Tax implications for borrowing from family?

Didn't find your answer?

Hi, i just wanted to understand the tax implications from borrowing around £10,000 from my family (kids), for my hair salon business.  
Would there be any tax implications if this was given to me as an interest free loan or a gift? 

Replies (9)

Please login or register to join the discussion.

avatar
By paul.benny
26th Jan 2021 22:02

Are your children grown-up?
Where did their savings come from?
What happens if you can't/don't repay the money?
Will you be paying interest?
etc

Thanks (0)
Replying to paul.benny:
avatar
By Kas12773
26th Jan 2021 22:16

Yes, they are over 18
From there own working income
No interest.. interest free

Thanks (0)
.
By Cheshire
26th Jan 2021 22:15

Tax implications for the goats.

Thanks (0)
RLI
By lionofludesch
27th Jan 2021 05:28

What does your accountant advise?

Thanks (2)
avatar
By Tax Dragon
27th Jan 2021 06:13

You've tagged corporation tax. Is that because you are a company*? The biggest problem with asking questions in a forum like this is not the alleged snidery of respondents (something I have been accused of on many an occasion): it's that tax is hugely fact-dependent and people either make up facts (as my accuser yesterday had) or provide a fraction of the relevant facts (and then get wrong answers** given in good faith).

It really is best to take personal advice from a personal advisor.

*You are not a company. You might own a company that trades, you might think of yourself and the company in the same breath (and ask a question about a loan to your company as if it were a loan to you), but you are not a company.

**More accurately, a (possibly) right answer to a wrong/incomplete question. And - here's the point - neither you nor the respondent would know.

Thanks (2)
Replying to Tax Dragon:
RLI
By lionofludesch
27th Jan 2021 09:08

Tax Dragon wrote:

You've tagged corporation tax. Is that because you are a company?

Good spot.

Thanks (0)
avatar
By Justin Bryant
27th Jan 2021 09:30

The potential tax issues are nothing compared to the almost guaranteed emotional etc. issues when borrowing from friends/family. I would avoid this if possible just for that reason alone (unless the so-called lender considers it to be more or less a gift from the outset).

Thanks (1)
Replying to Justin Bryant:
avatar
By Paul Crowley
27th Jan 2021 10:49

Agree

The 'loan' should be to you the person as a family arrangement

Up to you what you then do with it

The loan is not to the business if sanity is to the forefront

Thanks (0)
Replying to Paul Crowley:
avatar
By Tax Dragon
27th Jan 2021 12:09

A more salient point perhaps if the OP has a company (which I doubt, despite the tag).

But you and Justin both generalise (in this thread and others). Which kind of reinforces my point above, as generalisations are not personal advice. We know zilch about the OP. We can hazard some guesses (or, like you and Justin, generalise), but as s/he's the silent type (as they generally are, if they're not aggressive towards respondents)*, guessing (and generalising) can cause as much damage as good.

*Which generalisation of my own leads me to the conclusion that I likely won't comment at all in future on most Jo/e Public threads (and I will assume anon threads are from Jo/e). In fact, I think the forum would benefit if everyone made a similar decision. It avoids doing harm to silent OPs (I know some of you don't care about that, but maybe you should). It avoids being abused by the aggressive OPs (I know some of you get off on that, but maybe you shouldn't). And it would discourage both sets of OP from posting in the first place. (At the moment, I think they see that people respond so they keep coming.) Win, win, win, IMHO.

Thanks (2)
Share this content