Once the agreement is signed, a lender's job is mostly to let the standing order arrive and keep simple records. This field guide covers the monthly rhythm, what to keep for HMRC if you charge interest, and the calm sequence to follow if a payment slips.
The first 48 hours
Two small acts set the whole tone. First, if the money hasn’t moved yet, send it by bank transfer carrying your agreement’s payment reference — that one habit makes the advance provable forever. Second, suggest — once, lightly — that the borrower sets up a standing order. Then consider your admin complete. The completion email holds your signed agreement and certificate; keep it somewhere you’d find it in five years.
If a document uses deed wording or has an uncompleted witness section, resolve that before relying on the signing process. Our guide to witnesses and notaries for family loans explains what to check in England and Wales.
The monthly rhythm: nothing
The counterintuitive discipline of family lending is that the lender’s job, done well, is silence. The schedule does the chasing; the standing order does the paying; the relationship stays about everything except money. Checking in “just to see how repayments are going” converts a working plan back into an awkward subject. If the payments arrive, say nothing. That’s the product working.
Your terms, re-read once
Spend two minutes re-reading your own agreement now, while nothing is wrong: what it says about a missed payment, and whether early repayment is allowed. Knowing your terms cold means that if anything ever wobbles, you respond from the document rather than from the mood of the moment — which is precisely what the document is for.
If a payment slips
Don’t panic and don’t pounce. Most “missed” family payments are a cancelled standing order after a bank switch or a genuinely forgotten date — and there is a right order to responding that starts far softer than you’d think: a logistics-first message, then a written renegotiation if money is genuinely tight, and only much later anything formal. A part payment, or a written acknowledgement signed by the borrower, also restarts the six-year limitation clock — as long as it happens before the six years run out — so patience rarely costs you anything legally.
The tax minute
If your loan is interest-free, HMRC needs nothing from you — repayments of your own money are not income. If you are charging interest, what you receive is savings income; the Personal Savings Allowance (and, on a lower income, the starting rate for savings) often absorbs modest amounts. If it doesn’t, you need to tell HMRC yourself — nobody reports family-loan interest for you — and the full picture is a two-minute read. Either way, there is no form to file with HMRC for making the loan itself.
Common questions
What should a lender do after signing a family loan agreement?
Very little. If the money hasn’t moved yet, send it by bank transfer with the agreement’s payment reference. Suggest once that the borrower sets up a standing order, and keep the completion email with your signed agreement and certificate somewhere you’ll find it in five years. After that, let the schedule do the chasing.
What should I do if a family member misses a loan payment?
Start soft. Most missed family payments are a cancelled standing order or a forgotten date, so send a friendly, logistics-first message and let any grace period in your agreement run. If money is genuinely tight, agree a revised schedule in writing. Move to a formal letter before claim only if the softer steps have failed.
Does being patient with late payments affect my right to sue?
Rarely. You normally have six years to sue for each missed payment, and a part payment or a written acknowledgement signed by the borrower restarts that clock, as long as it happens before the six years run out. A no-waiver clause (LendRight’s agreement has one) also means accepting a late payment doesn’t rewrite the schedule.
Do I have to tell HMRC about interest on a family loan?
Only if the interest takes you over your tax-free allowances: the Personal Savings Allowance (£1,000 at basic rate, £500 at higher rate) and, on a lower income, the starting rate for savings. If it does, tell HMRC yourself, because nobody reports it for you. HMRC usually collects the tax through your tax code, unless you already file Self Assessment or the interest is over £10,000.