The Government no longer plans to change the way family loans are treated for tax purposes as part of Budget 2022.

The previously proposed change could have led to a tax being levied on those who received a loan from a family member, such as a child who borrowed from a parent to fund the purchase of a home.

When a loan is given between family members, the amount a person foregoes in interest is considered a taxable gift.

At present, the value of that potential interest is calculated against "the best price obtainable in the open market", which could include the rate offered in a savings account.

However the current ultra-low interest rates on offer means that that amount could be little or nothing.

Under Budget 2022, the Government had planned to change the legislation so that the value of the gift would be calculated against the "best price obtainable of borrowing an equivalent amount of money in
the open market".

This would have meant the value of the gift would be calculated against the interest rates charged on loans only.

However the Department of Finance has today withdrawn the planned change as part of a number of amendments to the Finance Bill 2021.

It said that the Minster for Finance Paschal Donohoe had made the decision as "he believes greater consideration needs to be given to the proposal."