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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15914
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I need to know an answer please . I am working part

Resolved Question:

Hello , I need to know an answer please . I am working part time and i am getting working and child tax credit . A friend of mine is helping me with money (as a loan I have to give it back when i start working full time and finish my qualification ) does this effect my working tax credit ?
Submitted: 2 years ago.
Category: Tax
Expert:  TonyTax replied 2 years ago.
Hi.

A loan is not counted as income for tax credit purposes. However, in order to be able to prove that the money from your friend is a loan if you are asked about it by the tax credit office, you should have your friend write you a letter each time they lend you some money.

Take a look here for information on what constitutes income for tax credit purposes.

I hope this helps but let me know if you have any further questions.
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Customer: replied 2 years ago.

Ok , I understand , Thats not a problem of writing a letter as my friend pays all the taxes and every time he loan me money it was payed via cheque to my bank . I just wander if this is counted as income by borrowing money each month ?

Expert:  TonyTax replied 2 years ago.
It won't be so long as you have something in writing stating that each payment is a loan which will be repayable at some point in the future.

Income is only income for tax credit puposes if it is taxable. Even if the payments to you were gifts, they wouldn't be taxable and, therefore, wouldn't count as income for tax credit purposes. Even maintenance payments which aren't taxable are not income for tax credit purposes.

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