Offset mortgage - interest free loan or a gift?

[benmolony]

Some banks now offer products where a parent can apply to have their savings offset against a child's mortgage. The net impact is the parent foregoes the savings interest and the child is saved from paying the mortgage interest - a substantial gap!

Is the parent liable to any income tax on the interest foregone, similar to a benefit-in-kind?

Would any interest foregone count as a gift for IHT?

[Lee Young]

The amounts forgone by the parents would technically be a gift but the amounts involved would probably be minimal, within the annual exemption, or within the usual exepnditure out of income exemption.

I can not see any income tax issues for the parents or the children.