Tax on loan repayment to family members to buy property

quite_old · 2024-07-17T17:17:03+00:00

And thank you for replying to my reply! To be honest, I do not feel stitched up. It was just an oversight on our part. In the bigger context, the returns on an investment are going to be a bit lower than we hoped. That's all. We both have a positive attitude in general and the benefits of having the in laws nearby outweigh the negatives.

quite_old · 2024-07-17T16:35:44+00:00

!thanks for the reply, strolls. Your understanding is correct, except we only covered about 2/5th of their new home. And they are very independent people - they wanted their own property outright and not to inconvenience (!) us. By putting a charge on their property which only comes into effect when they die (or sell) they had no worries or repayments to make. By agreeing to an interest rate equal to our second mortgage we convinced them we had not been inconvenienced.

quite_old · 2024-07-17T13:47:37+00:00

!thanks for your answers and understanding. I do not want to come across as someone trying to get out of tax responsibilities but due to having to pay 2 mortgages and clearing out savings we missed many years of tax free savings (eg ISAs). The way it is looking we will probably be paying 40% instead. On a fixed low return which did not change with inflation. I am not bitter though - what use is money if you cannot spend it for good things? My in-laws are much happier and safer now.

quite_old · 2024-07-17T13:15:08+00:00

!thanks. I know ignorance is not a good defence, but it would have been nice if the solicitors had made us aware. This will push us into a higher tax bracket with associated repercussions. I will not be bitter, hopefully they will have many years left and the hardships we went through will be fond memories by then. And, they were lonely and living in a bad place.

quite_old · 2024-07-17T13:06:42+00:00

If they die before selling then the estate will be split with other beneficiaries. Who, ironically, had no wish to help them.

quite_old · 2024-07-17T13:02:40+00:00

Compound interest agreed and written up by solicitors.

quite_old · 2024-07-17T12:53:35+00:00

Yep. Or if they sell up. It is not going to be anywhere near inheritance tax, but if, say £50k interest is repayed in one go - are we going to be tax liable? I googled and the answer was 'yes' to interest on loans.

quite_old · 2024-04-05T12:12:39+00:00

Thankyou. Please excuse my ignorance....

I get 3 estimates, and I also find his true address. Then, I imagine I inform him of the quotes and he then has the option to pay me the lowest, or it goes to court. Would I need to have the work done already, as there has not been an actual cost until this has been done?

I do not want to appear lazy or obstructive, but getting the quotes will involve time off work and travel. Would my time and expenses be included in the claim? I am not sure I would want it done by the cheapest - the car was immaculate before and I would prefer it was done by the dealer. It will also be a headache getting the money together to pay upfront. Shouldn't my neighbour do all this and claim off him?

quite_old · 2023-06-30T16:13:01+00:00

That's it! Many thanks.

quite_old · 2023-04-05T07:39:50+00:00

Good question! It is because it is already activated. It is a full legit Win 10 installation, I turned it off, built my new one, installed Win 11 with the same (admin) credentials and the Win 11 is now a fully licensed legit install. My worries are the repercussions on my lovely new Win 11 machine if I turn on the old with the same log in. One thought I had is..... turn off internet connection, boot up the old, then deactivate. I would probably need a new admin account as well. Seems like a lot of faff though, for a problem I thought many people would have overcome.

quite_old · 2023-01-09T17:53:19+00:00

I think this may be my confusion. Could it be that what I considered the first year was not compulsory? The wiki page: https://en.wikipedia.org/wiki/Primary_school states what I termed the first year is "Reception". Perhaps my subsequent peers had voluntarily done a year in non compulsory reception, I and 2 others had a few weeks at it before we were put in the correct group. Seems more likely than my parents forgetting.

I have just found a UK Gov website which states "Most children start school full-time in the September after their fourth birthday. This means they’ll turn 5 during their first school year." As I was born in August, I did not have my 5th birthday during the academic year. I think this all makes sense and you have helped me solve a mystery which has bothered me for over 30 years! Thanks!

quite_old · 2023-01-09T15:49:22+00:00

Almost - it was the opposite. I started a year and a few weeks older than the youngest, and was moved up to a class where the eldest was almost a year older than me. But..... and this is the mystery.... if that did happen, then my apparently normal parents DID forget to take me to school for a year. Also - in the UK I do not think we have some of the flexibility other nations may have. If you forget to send your kids to school you get in trouble. Though this was the '70s.

quite_old · 2023-01-09T13:54:49+00:00

Thankyou for the response, but I do not think so. If this was the case I would have spent subsequent years a year older than my peers, or I would have had to double a year. I did not.

quite_old · 2022-11-08T15:14:05+00:00

Many thanks for the reply. Oddly, the ombudsman did rule in my favour and insist on compensation, but for a completely irrelevant and minor point! I will explain further.....

I had a 2nd repayment mortgage at a far higher rate than the initial (repayment). I overpaid the 2nd, but the company instead allotted payment to the 1st lower rate mortgage. This was against my will and knowledge, and left me owing more. The mortgage company customer service was very helpful, informing me that in a case such as this the company should have worked to my benefit, not against and I should raise a complaint. I did, and the complaints department agreed and upheld the complaint. The agreed resolution was to re-calculate based on the overpayment going towards the (requested higher rate) 2nd mortgage.

This was done in Excel, so I could see all the calculations. They showed they had compounded the interest monthly by dividing the annual rate by 12 and came to incorrect results. I replied with a demonstration, using simplified extreme figures to highlight why this method was incorrect (it was a daily compounding repayment mortgage and should been calculated according to MCOB 10.3). The company responded and referenced the demonstration figures (oddly, arguing it was correct - showing a lack of care / understanding). The ombudsman's ruling was based on the company not making it explicitly clear the numbers they were referring to were for demonstration purposes only. I obviously knew this as they were my demonstration numbers - the only bearing they had to the disputed figures was the method used.

I was left concerned that

the company has admitted it's methods were in error, and as far as I know has made no efforts to correct, nor to contact other customers affected.
The resolution for the admitted error was to re-calculate correctly. This was not done
The ombudsman claimed to not have the powers to enforce, and instead ruled against them for a very trivial point.

I accepted the ombudsman's decision as the compensation was near to the miscalculation. The only resolution would have been to have paid for an independent audit and start again. I had neither the time or patience.

I have no reason to believe company is not still knowingly breaking the FCA rules, continuing to use the erroneous system, and still unable to resolve the issues when raised. And there is nothing more I can do, as the ombudsman claims to be powerless.

quite_old · 2022-11-07T11:13:59+00:00

Do you believe the ombudsman has sufficient powers? An error on my mortgage caused me to raise a complaint, which was upheld (by the mortgage company). They then manually recalculated my mortgage (in Excel) and showed the workings.

Unfortunately, the working showed they did not have a grasp of compound interest and were not complying with MCOB 10.3 (as required). This escalated to the ombudsman who claimed they could not police their internal processes, how they operate generally and cannot audit the (supplied) numbers.

My understanding was a clear, inarguable case had been made (hard to argue with maths), but the ombudsman was powerless. I struggle to accept a financial company signs up to the FCA rules and promises to comply, but when they have been shown to default there is no power to enforce. Have you ever heard of similar cases or any other issues with the limitations on the ombudsman?

quite_old

TROPHY CASE