Free UK family money tool

Gift vs Loan Calculator UK

Work through the practical difference between giving money and lending it. Clarify whether repayment is expected before the money changes hands.

Compare gift vs loan ↓

Answer first

Is money for family a gift or a loan?

It is a gift when there is no genuine expectation that the recipient will repay it. It is a loan when repayment is expected, even if the interest rate is 0%. The clearest answer comes from the parties’ intent, written terms and what they actually do.

Gift or loan? Money to family is one or the other, and the difference matters: a gift cannot be asked back and counts toward gifting limits, while a loan needs a written agreement and a repayment record to count as one. Compare both for your amount, then create a signed loan agreement with Chipkie.

How to use it

Work through the decision in three steps

1
Choose the real intention
Decide whether the money is meant to come back.
2
Review the practical questions
Consider repayments, interest, timing and how the transfer will be recorded.
3
Use the matching structure
Create a repayment plan for a loan, or keep appropriate records for a genuine gift.

Useful context

UK tax context depends on the arrangement

Interest received on a loan can form part of the lender’s taxable savings income. For gifts, GOV.UK explains that some lifetime gifts can affect Inheritance Tax if the donor dies within seven years, subject to exemptions and the circumstances.

Gift vs loan FAQs — UK

What is the difference between a gift and a loan?

A gift has no genuine expectation of repayment. A loan does, even when the agreed interest rate is 0%.

Can I give money to family in the UK?

Yes. GOV.UK explains that some gifts can affect Inheritance Tax depending on exemptions, value, timing and whether the donor survives seven years.

Is an interest-free family loan still a loan?

Yes. A loan can have a 0% interest rate when the principal is genuinely expected to be repaid.

Should a family loan be in writing?

Written terms help both people remember the amount, repayment timing, interest rate and what happens if plans change.

Is interest from a family loan taxable?

Interest received can form part of taxable savings income. The tax position depends on the lender’s wider income and allowances.

What records should I keep for a gift?

GOV.UK recommends keeping records of what was given, who received it, its value and the date.

Decided it is a loan?

Turn the decision into a clear repayment plan and track it for free in Chipkie.

Create a loan →