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TonyTax
TonyTax, Tax Consultant
Category: Tax
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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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hi would i be liable to any taxation if a friend of mine paid

Resolved Question:

hi would i be liable to any taxation if a friend of mine paid off my mortgage directly with the bank (so the payment doesn't come to me first but he pays the bank directly) and then i repay him my mortgage rather than the bank? The value would be c.£140K
Submitted: 3 years ago.
Category: Tax
Expert:  TonyTax replied 3 years ago.
Hi.

The recipient of a gift isn't taxable on it. However, this is not a gift as your intention is to repay your friend for paying off your bank mortgage. You won't pay tax on the loan from your friend. If you pay interest on the loan, your friend will have to pay income tax on that subject to his personal circumstances of course.

I hope this helps but let me know if you have any further questions.
Customer: replied 3 years ago.

Thanks. So to confirm, the UK HMRC won't see my friend as paying off my mortgage as revenue, so it doesn't affect my tax liability. This wouldn't be something I would need to declare on my tax return?

Expert:  TonyTax replied 3 years ago.
You won't pay tax on the loan and you don't need to inform HMRC but it would be as well to have your friend write you a letter confirming his actions, ie that he has paid off your mortgage and you will repay him direct.
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