gift tax

[johnk]

I want to help my daughter buy a house by lending her up to £40K interest free. Will this be seen as a gift by the taxman and will she then be taxed??

[anniebird]

If you are lending her the money interest free then there will be no tax liability for you and no tax liability for her. You should have the loan properly documented so that there are no problems in the future regarding repayment etc. Also the bank/building society may wish to know the source of the funds before they agree to giving her a mortgage.

[dzug2]

The mortgage company WILL want to know the source of the funds (it's a standard question) and may or may not turn uppity about it.

It may complicate things that it's a loan rather than a gift - it could reduce the amount they are prepared to lend

But tax is a non-issue in this particular circumstance

[Buenchico]

There's no such thing as 'gift tax' in the UK anyway!

You're free to give what you like, to whom you like and when you like without the tax man having the slightest bit of interest. The only exception is that if the donor dies within seven years of making the gift, some or all of the money might still be counted as part of the donor's estate when any liability for inheritance tax is calculated.

If you need to know the rules about gifts and inheritance tax, see here:
http://www.hmrc.gov.u...erty/exempt-gifts.htm

Chris

[factor-fiction]

You may also need to be careful if you claim benefits and are seen as deliberately reducing your savings, or similarly if you are seen as trying to avoid care home fees.

There may also be questions asked about where the money came from in order to address money laundering issues

[johnk]

Thanks everyone, Looks like it ill be OK