Slide the rate, watch the monthly figure change, and see the full cost of borrowing before anyone commits — plus what HMRC will expect from you if interest changes hands.
The maths here is standard amortisation: equal monthly payments, interest compounding monthly on the reducing balance, exactly as a bank would run it, with the rate expressed per year. One difference worth knowing: LendRight’s agreement builder accrues simple daily interest with no compounding, counted on actual days elapsed, so its repayment schedule can come out fractionally different from the figure above.
Put this in a real agreement →Charging nothing is perfectly lawful, and it’s what most families do. Where a rate is charged it tends to be small — enough to track inflation or to make the arrangement feel businesslike rather than awkward. No number is officially “correct”, but two pieces of law shape the sensible range.
England & Wales has no single interest ceiling for a private loan between individuals — but courts can reopen credit relationships they find unfair (Consumer Credit Act 1974, ss.140A–C). This calculator flags anything at 25%+ — for family, you'll almost always want to be far below that.
Any interest you receive counts as savings income for the lender. The Personal Savings Allowance may cover it (£1,000 for basic-rate taxpayers, £500 for higher-rate), but above that it must be reported to HMRC — usually through Self Assessment. State the annual rate in the agreement, which is exactly what this calculator uses.
Published by: RULE8 Inc., the company behind LendRight.
Last reviewed: July 3, 2026 by the LendRight Editorial Team.
Sources: Consumer Credit Act 1974 ss.140A–C (unfair relationships); Limitation Act 1980 s.5; HMRC guidance on tax on savings interest and the Personal Savings Allowance.
Limits: the numbers above are illustrations, not advice — legal, tax or otherwise. Talk to a solicitor or accountant about the specifics of your own arrangement.