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Post by brokenbiscuits on Sept 13, 2017 11:29:58 GMT
Hello all,
Could someone tell me collateral's position on interest for loan parts that are queued on the secondary market?
Does interest accrue as normal or do you receive no interest as long as it's up for sale, but still in your possession?
Thanks
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ilmoro
Member of DD Central
'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on Sept 13, 2017 11:34:46 GMT
Hello all, Could someone tell me collateral's position on interest for loan parts that are queued on the secondary market? Does interest accrue as normal or do you receive no interest as long as it's up for sale, but still in your possession? Thanks Hi The latter, no interest accrues on loan parts up for sale.
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Post by brokenbiscuits on Sept 13, 2017 11:55:07 GMT
Cheers,
Makes the cash back offers look less appealing. Luckily I just put what I wanted and not top loaded. Looks like others have asked for much more than they truly wanted.
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elliotn
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Post by elliotn on Sept 13, 2017 14:06:39 GMT
Hello all, Could someone tell me collateral's position on interest for loan parts that are queued on the secondary market? Does interest accrue as normal or do you receive no interest as long as it's up for sale, but still in your possession? Thanks If you de-list within same day, say, 11pm to be safe, you will retain interest for that day.
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fp
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Post by fp on Sept 13, 2017 14:15:15 GMT
Cheers, Makes the cash back offers look less appealing. Luckily I just put what I wanted and not top loaded. Looks like others have asked for much more than they truly wanted. cash back can be more tax efficient than earning interest for some investors.
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Post by elephantrosie on Sept 13, 2017 19:14:59 GMT
CB is tax efficient if you pay 40% or 45% tax.
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elliotn
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Post by elliotn on Sept 13, 2017 22:20:42 GMT
CB is tax efficient if you pay 40% or 45% tax. Not to be sniffed at for 20% either with a fifth of income saved.
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Post by elephantrosie on Sept 14, 2017 6:21:52 GMT
true. but too much hassle for the 20%. rather buy something that doesnt require trading on SM.
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Post by brokenbiscuits on Sept 14, 2017 8:11:04 GMT
It seems to me, to make the "buy and dump" after cash back strategy be of benefit, you need to be sold up in a month or less after getting the cash back and need to be investing 10k or more as a bare minimum.
For Investments of £0.00 - £4,999.99 – 0.25% Cashback
For Investments of £5,000.00 - £9,999.99 – 0.5% Cashback
For Investments of £10,000.00 - £24,999.99 – 1.0% Cashback
For Investments of £25,000.00 - £49,999.99 – 2.0% Cashback
For Investments of £50,000.00 - £99,999.99 – 3.0% Cashback
For Investments of £100,000.00 + – 4.0% Cashback
12% interest a year or 1% a month if you hold. Reduced to 0.8% or 0.6% interest a month after tax.
So if you invest 10k and manage to get it out in a month or under, you could have made an extra £20 than if you just invested in something at the same rate you were prepared to hold. Big numbers for little extra bonus considering the liquidity and default risk of potentially being locked in a loan you didn't want to hold.
Or as a previous poster said in much fewer words, not worth the effort. (Of trying to game the system)
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IFISAcava
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Post by IFISAcava on Sept 14, 2017 10:15:05 GMT
It seems to me, to make the "buy and dump" after cash back strategy be of benefit, you need to be sold up in a month or less after getting the cash back and need to be investing 10k or more as a bare minimum. For Investments of £0.00 - £4,999.99 – 0.25% Cashback For Investments of £5,000.00 - £9,999.99 – 0.5% Cashback For Investments of £10,000.00 - £24,999.99 – 1.0% Cashback For Investments of £25,000.00 - £49,999.99 – 2.0% Cashback For Investments of £50,000.00 - £99,999.99 – 3.0% Cashback For Investments of £100,000.00 + – 4.0% Cashback 12% interest a year or 1% a month if you hold. Reduced to 0.8% or 0.6% interest a month after tax. So if you invest 10k and manage to get it out in a month or under, you could have made an extra £20 than if you just invested in something at the same rate you were prepared to hold. Big numbers for little extra bonus considering the liquidity and default risk of potentially being locked in a loan you didn't want to hold. Or as a previous poster said in much fewer words, not worth the effort. (Of trying to game the system) Remember cashback is not taxable so big advantage for higher rate tax payers. Plus you get the money upfront so can reinvest For the bigger numbers, and if you drop feed the investment back (so also earn interest), it may well be worth it, as long as take the risk that may need to hold to maturity.
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fp
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Post by fp on Sept 14, 2017 11:50:03 GMT
I'm of the understanding that cash-back is treated as a capital gain, and is subject to CGT once the threshold is reached.
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ilmoro
Member of DD Central
'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on Sept 14, 2017 12:29:16 GMT
I'm of the understanding that cash-back is treated as a capital gain, and is subject to CGT once the threshold is reached. Shouldnt be. AIUI Straight cashback is an inducement by the platform to lend and is therefore not taxable. Instant returns are treated as a capital discount becuase they relate to a period of time and therefore count as capital gains on sale or redemption. Referral bonuses are believed to be taxable as benefits in kind.
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