Reply To: Regular payments from son…..


I am not sure that loans from family and voluntary payments are mutually exclusive. In CH/3013/2003, the Commissioner was satisfied that money loaned by a relative out of kindness took the form of a voluntary payment, but the issue then was whether to treat it as income or capital – see Reg 46(6). In those days it mattered – if the payments were not capital, they would count as income subject only to a £10 disregard (later increased to £20). Now that voluntary payments are fully disregarded as income, it will seldom matter whether you count them as income or capital: unless the claimant at any time posseses enough cash to generate tariff income or bust the capital limit, voluntary payments don’t affect anything.

You will need to decide whether the claimant received these loans on a volunbtary basis, which is to say that they were made as a gesture of kindness with no expectation of any kind of gain on the lender’s part. Morrell and CH/3013/2003 are both very good on that point. If you conclude that the loans were voluntary, then they are disregarded in full as income and it does not matter whether they were or had to be paid back.