Do I need to pay tax in UK on a low-interest loan from my mum in India?
Answers:
No, there is no tax due on a loan from your point of view, although your mother may be liable to tax on the interest you pay her on the loan. She would need to take advice in India about that.
It would probably be wise to draw up an agreement between you concerning the loan in order to protect your mother if you don't pay it back.
Don't tell anyone where you got your money from.. as far as anyone is concerned it came from under your mattress..
I really cant believe the thumbs downs ! OK! then daftys declare everything to the Government..
No.
Tax is only payable on earned or unearned income and a loan falls into neither of those categories.
Although there is no requirement to do this 'officially', nonetheless it would be sensible to draw up a simple agreement showing the amount lent and how it is to be repaid and keep a record of those repayments as they occur.
Remember also that at some future date, HMRC might want to know where the funds came from which is another reason for keeping a written record.
As an aside, if the house is to be used for letting purposes, the interest you pay may be tax deductible.
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