Family Loan Tracker: 2026 UK Guide & Template

By The Chipkie Team, Personal Finance Editorial Team  ·  Last updated 7 September 2026

Lending money to a relative is one of the most common financial transactions in Britain, and one of the worst documented. A well-kept family loan tracker — a simple, dated record of what was advanced, what has been repaid and what remains outstanding — is the difference between a loan that quietly resolves itself and one that ends in a family rift, a lender refusal, or an argument with HMRC over whether the money was ever a loan at all.

This guide sets out what to record, how to keep the record credible, and where informal tracking falls dangerously short — particularly when the money is heading towards a house deposit.

Key Takeaways

• A tracker records the loan; it does not create it. You need a signed written agreement first, ideally executed as a deed, which carries a 12-year limitation period compared with six years for a standard contract.
• Every entry should show the date, amount, method of payment, running balance and any interest applied — bank transfers with clear references are the strongest evidence.
• If the money is going towards a mortgage deposit, lenders require a gifted deposit letter. A loan disguised as a gift is mortgage fraud, and a genuine loan must be disclosed to the lender.
• Money forgiven or never repaid becomes a gift for inheritance tax purposes. The annual gift exemption is £3,000 per tax year, with one unused prior year available to carry forward.
• Interest received on a family loan is taxable savings income and must be declared to HMRC — the borrower’s convenience does not make it tax-free.

What Should a Family Loan Tracker Actually Record?

A family loan tracker should record, for every transaction: the date, the amount, the direction (advance or repayment), the payment method, a running outstanding balance, any interest charged or waived, and a short note explaining anything unusual. Kept consistently, it becomes contemporaneous evidence that a court or lender will take seriously.

The minimum fields for a repayment tracking spreadsheet:

• Date — the date funds actually moved, not the date agreed
• Amount — in pounds, to the penny
• Type — advance, scheduled repayment, lump-sum overpayment, or interest
• Method — bank transfer, standing order, cash (avoid cash)
• Payment reference — for example “LOAN REPAY 04/26”
• Opening and closing balance — so the outstanding sum is visible at a glance
• Notes — missed payments, agreed payment holidays, partial waivers

Two additional columns matter more than people expect. First, a variation log: if you agree to pause repayments for six months, write it down and have both parties confirm it in writing. Undocumented variations are where disputes begin. Second, a waiver column: any amount you formally forgive is a gift, with inheritance tax consequences we cover below.

Why Isn’t Informal Loan Record Keeping Enough on Its Own?

Informal loan record keeping proves that money moved. It does not prove the money was lent rather than given. In English law the burden generally falls on the person claiming a loan to show a repayment obligation existed. A spreadsheet with no underlying agreement can be dismissed as one party’s private notes.

The fix is straightforward: pair the tracker with a properly drafted family loan agreement setting out the repayment terms. That document should state the principal, interest rate (or explicitly that it is interest-free), repayment schedule, what happens on default, and what happens if the lender dies before the loan is repaid.

Executing it as a deed rather than a simple contract extends the limitation period under the Limitation Act 1980 from six years to twelve. On long-running family loans — a 15-year advance towards a first home, say — that distinction can decide whether the debt is enforceable at all. Our experience across the agreements users create shows long-dated informal loans are precisely the ones that outlive the six-year window.

Common tracking failures we see repeatedly:

1. Cash advances with no paper trail at all
2. Repayments made with no reference, indistinguishable from ordinary family transfers
3. Verbal agreements to “skip a few months” that later become “you said I didn’t have to pay it back”
4. No record of who bears costs if the borrower defaults
5. Nothing addressing what happens to the debt on the lender’s death — see the guidance on proving a verbal family loan in court

How Does a Family Loan Affect a Mortgage Application?

Critically. UK lenders distinguish sharply between gifted and borrowed deposits. A gift requires a signed gifted deposit letter confirming the money is a genuine gift with no repayment expected and no interest retained in the property. A loan must be disclosed and will be counted against affordability — and many lenders will refuse borrowed deposits outright.

This is the single most consequential point in this article. If your tracker shows repayments flowing from a borrower who told their lender the same money was a gift, you have created a written record of a false declaration.

A gifted deposit letter is false if the giver expects repayment, has agreed any repayment schedule, or retains a beneficial interest in the property. Signing one in those circumstances is fraud by false representation — a criminal offence carrying up to ten years’ imprisonment, alongside the near-certain unwinding of the mortgage offer. If you intend to be repaid, say so, and explore a properly secured family loan structure instead. Independent guidance on deposits is available from MoneyHelper, the government-backed service delivered by the Money and Pensions Service.

What Are the Tax Consequences You Need to Track?

Two tax issues arise. Interest you receive is taxable savings income and must be declared to HMRC. Separately, any amount you forgive, or that remains unpaid when you die, is treated as a gift or an estate asset for inheritance tax. Your tracker should therefore be tax-aware from day one.

The figures that matter:

• Annual gift exemption: £3,000 per tax year, and one unused prior year may be carried forward, giving up to £6,000.
• Small gifts exemption: £250 per recipient per tax year, to any number of people, provided no other exemption is used for that person.
• Nil-rate band: £325,000, currently frozen, with an additional residence nil-rate band where a home passes to direct descendants.
• Seven-year rule: gifts are potentially exempt transfers. Survive seven years and the gift falls out of your estate. Taper relief between three and seven years reduces the tax due, not the value of the gift — a distinction that catches out even experienced executors.

Rates and allowances change; check current figures on GOV.UK before relying on them. Note also that an outstanding loan is an asset of your estate — your executors are expected to pursue it. Record forgiveness explicitly, in writing, with a date, or your family may face an unwelcome demand at the worst possible moment.

Should You Use a Spreadsheet or a Loan Agreement App?

A spreadsheet is fine for a simple, short-term loan between two people. A dedicated loan agreement app is better where the loan runs for years, involves interest calculations, multiple parties, or may need to be evidenced to a third party such as a lender, solicitor or HMRC. The key difference is verifiability.

• Spreadsheet: free, flexible, but editable by anyone and easily disputed as self-serving
• Bank statements alone: credible but silent on terms and intent
• Purpose-built platform: timestamped entries, automatic interest and balance calculations, both parties seeing the same record

How often should a family loan tracker be updated?

Update it every time money moves, and reconcile against bank statements at least quarterly. Both parties should confirm the outstanding balance in writing annually. Our experience shows annual confirmation is the single most effective step for preventing disputes, because it removes any later claim of misunderstanding.

Does a family loan need to charge interest?

No. UK law does not require interest on a private family loan, and interest-free loans are common. Simply state clearly in the agreement that the loan is interest-free. If interest is charged, the lender must declare it as savings income. There is no UK equivalent of a minimum prescribed rate for private loans.

What happens if the borrower stops repaying?

With a written agreement and a maintained tracker, the lender can pursue the debt through the courts, typically starting with a formal letter before action. Without documentation, recovery is far harder. The limitation period runs from the last acknowledgement or payment — six years for a contract, twelve for a deed.

Do I need to tell HMRC about a family loan?

The loan itself is not taxable and needs no report. However, interest received must be declared through Self Assessment, and any forgiven amount may be reportable by your executors for inheritance tax purposes. Keep the tracker as supporting evidence — HMRC may request it years later.

Where Should You Start?

Start with the agreement, not the spreadsheet. A tracker that sits on top of a clear, signed, dated document is powerful evidence; one that floats free is just a list of numbers. Agree the terms, put them in writing, execute as a deed if the loan will run beyond six years, then track every pound from the first advance.

Chipkie lets you create a written family loan agreement and track every repayment in one place, so both sides always see the same balance and the record holds up when it matters.

Disclaimer: The information provided in this article is for informational purposes only and should not be considered financial or legal advice. Property and lending laws in the United Kingdom vary and may change over time. We always recommend consulting with a qualified solicitor and mortgage broker before entering into a property purchase or financial arrangement with another party.