My elderly brother is purchasing a bungalow. I am 15 years younger than him. He is looking at equity release after the purchase. As some of the terms are restrictive and have penalties, I wondered if I could take out a loan on the same basis as the lifetime mortgage and put a charge on the property in the same way (i.e., compound interest, payable when the property is sold; give him the right of occupancy for life in case I predecease him, etc.). What would the tax implications be to me when the time comes to retrieve the money? 

Arthur Weller replies 

Three points immediately spring to mind: (1) For your own benefit (nothing to do with tax), make sure you have a legally enforceable loan agreement, with proper documentation. (2) You will have to pay income tax on the interest you receive. (3) Regarding inheritance tax on your brother's estate, HMRC is very suspicious of loans from family. See HMRC’s Inheritance Tax Manual at IHTM28321, IHTM28322 and IHTM28323 about things you need to be aware of.