I live in Canada. My brother in the U.K. is thinking of purchasing a house with his wife. They are both teachers and careful with their money but don't yet have money for a down-payment.

I am thinking of loaning them some money, somewhere on the order of £10,000 (around $16,000 rounded down). I'm well aware of the advice about only loaning money you are willing to lose, and would not be charging interest on this loan. I would take no ownership of the property.

What, if any, tax implications are there here, on both sides? There's currency risk, so I may have to pay capital gains or take a capital loss from currency differences. If I split this risk with my brother, would it work roughly the same way? Would this be considered a gift and, if so, would it be taxable? Does the money need to be in a U.K. bank account for e.g. 90 days before it can be used for a down-payment? Are there any other financial or tax implications I have not considered?

  • "Does the money need to be in a U.K. bank account for e.g. 90 days before it can be used for a down-payment?". That is a weird clause. Haven't heard anything of such existence in UK.
    – DumbCoder
    Aug 30, 2013 at 9:26
  • @DumbCoder, it's a thing in Canada (mybcmortgage.ca/down-payment-for-a-mortgage), was checking if it was also true for the UK. Aug 30, 2013 at 13:04
  • 2
    DC - I don't know about 90 days, but I've seen the bank request last 2 year's bank statements, and they'll question any odd (large) deposits. Sep 3, 2013 at 13:39

1 Answer 1


As far as I know (I am not a tax professional or IFA!) there would be no tax implications or other burden on the recipient of the loan under UK law, even if it ended up being treated as a gift rather than a loan.

There are no clauses about money being in the account for 90 days in UK housing transactions, however under money laundering rules your brother's solicitor might need sight of loan agreements to verify where the funds came from (I think it would depend on whether you paid the money to your brother direct, in which case there would be no problem, or if you paid it direct to the solicitor for the purchase).

What Canadian law might say about capital gains / inheritance tax (if the Canadian IRS did decide the loan counted as a gift) I have no idea.

  • Thank you very much, Vicky! I know much more about Canadian tax law than about the UK side of things, so this makes me happy. And yeap, already dealt with money laundering paperwork. Pretty straight-forward here as everything's on the up-and-up. :) Sep 3, 2013 at 14:28

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