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Post by Ace on Apr 27, 2019 17:26:42 GMT
I started another sale of two loans totalling £19.52 that became live again yesterday.
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corto
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Post by corto on Apr 27, 2019 21:02:59 GMT
That's what I thought, but it is hypothetical. You can't transfer or offset the loss's, in an ISA; they just stay there forever, like in a virtual graveyard, gradually gathering recoveries, until they become 100% dead, when all lifelines are withdrawn, all avenues are exhausted & declared irrecoverable. But of course any loss's in a standard account can be resurrected & offset against interest elsewhere. These standard redundant accounts, if emptied, will never die, will be there for eternity & can never be closed, as the taxman will won't to know about future recoveries so they can have some tax back. Don't forget them though; need to take a look now & again to check on recoveries. That's enough doom & gloom for now. Not quite hypothetical: I am currently transferring out and realise that when the account turns into a standard account, it would be possible to get some unexpected money back for any currently risk-band-removed loan that turns dead afterwards. Recoveries complicate this. Is it true that they are considered income by HMRC? Most of it is recovered capital?
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corto
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Post by corto on Apr 28, 2019 7:14:55 GMT
corto; Please explain how it is possible to change an IFISA account into a Standard account. I transferred some funds out of mine to other ISA providers, and FC sent me an email asking if I want theirs to stay an IFISA or turn into a standard account. I seem to remember that it's also mentioned in some threads here that after transferring out an IFISA turns into a standard account, suggesting that that happens automatically.
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corto
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Post by corto on Apr 28, 2019 7:18:57 GMT
FC has a FAQ page for rules when transferring out of their ISA that says
"Any loans that can’t be sold will be transferred over to a new Classic account, and will no longer be eligible for tax-free interest"
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corto
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Post by corto on Apr 28, 2019 9:29:20 GMT
corto: Thanks. I will have to eat my words. So if I have got it right, when you do a transfer to another IFISA platform; 1) You tick the box to say transfer all of the IFISA. 2) You also tick the box or indicate that you wish to sell any outstanding loans & transfer the proceeds. Once the process is complete Funding Circle transfer the remaining 'half dead' loans to a new Classic Account, which you can then be offset against gains elsewhere, for the current tax year. I am not sure as my situation is different. I didn't transfer all in one go and also sold out everything before transferring (as far as possible). I opened several other IFISAs in order to diversify better and are making several partial transfers. I asked AC if they do partial transfers out and they responded "yes" Three have gone through by now (AC is quite quick!), and after the first two, AC asked me by email if I want to keep theirs to be an IFISA. I said "yes" because it has to stay an ISA for the upcoming transfers to have ISA transfer status (that is important as one can only pay fresh money into one ISA per year). If the other transfers have gone through I may want to change to a standard account with AC in order to make use of the tax advantage for further defaults, ie the option to balance further losses. If you want to transfer everything in one go to a single target ISA you can (usually) tick on the transfer form of the target platform what you expect AC to do. If that requires selling any remaining loans, then I would assume you have to tick the respective box. It may or may not be that AC turns the IFISA into an ISA automatically afterwards. Their FAQ suggests so and I suspect they asked me by email because there was still a fairly large amount of money on my account after the first transfers. As for the tax situation: Others have basically confirmed above that any further losses can be set off against gains elsewhere. I am just a bit puzzled now what happens with any further recoveries. Since these are recoveries of capital (mostly) and the losses have never been offset against gains before, there should be no tax liability incurred. However, any lost and afterwards recovered interest should be considered interest such that one would have to pay some tax on it. I am not an expert at all and may be completely wrong..
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corto
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Post by corto on Apr 28, 2019 17:19:24 GMT
corto; Basically as the loss's were in the original IFISA account they will show there, instead of the account the surplus was transferred too. Not sure now if it is anything to get exited about, as anything recovered in the new account, would be just that; & as the original loss was not set against gains, there is no tax advantage. So one keeps the IFISA (with the defaulted loans) and gets a new standard account? Do you know if the "late" and "risk-band-removed loans" go into the new account? Or any "live" loans still unsold?
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criston
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Post by criston on Apr 29, 2019 7:42:31 GMT
corto; Just started another thread to get to the bottom of this.
'TAX. IFISA transfer to Classic'
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blender
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Post by blender on Apr 29, 2019 8:15:43 GMT
corto; No idea. I just assume what I said is the logical way it is done. We could do with someone here who has had the experience. We are trying to have that experience, but you will have to wait. Live loans put up for sale on 22 Feb but about 150 of them went 'processing' and were not sold on 22 March. Processing is not a credit event, never has been, just a system issue at the end of Feb, every year. All live put up for sale again on 22 March and awaiting the sale, except that about 10% went 'processing' over the Easter holiday again. So we will have a third cycle before we close this account and see what appears in the classic legacy account after withdrawal of cash (everything left I think) and what the tax report on it might show.
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ashtondav
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Post by ashtondav on Apr 29, 2019 11:35:18 GMT
corto; Basically as the loss's were in the original IFISA account they will show there, instead of the account the surplus was transferred too. Not sure now if it is anything to get exited about, as anything recovered in the new account, would be just that; & as the original loss was not set against gains, there is no tax advantage. So one keeps the IFISA (with the defaulted loans) and gets a new standard account? Do you know if the "late" and "risk-band-removed loans" go into the new account? Or any "live" loans still unsold? Not my understanding. When your ifisa gets transferred the non sellable “problem” loans go into a standard account. So if you had a £20,000 isa with £2,000 problem loans £18,000, once sold, would go to your new provider and you would be left with a non performing standard account with £2,000 of loans.
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blender
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Post by blender on Apr 29, 2019 12:01:20 GMT
blender; I was hoping to find someone who had gone through the process, on my new thread, for tax year 2018/19. I assume when yours in complete, you will not get a tax statement till the after the end of this tax year. No need to wait. You can get a tax statement for any period - even a single day. And so you should be able to work out the tax treatment for an interest payment or a recovery - unless they come in thick and fast. Ha ha ha, some chance!
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Post by kcrane on Apr 30, 2019 22:00:05 GMT
Depending on the outcome of these last 19 loans, my one year experience with FC in this account will end up somewhere between a 4.62% loss and a 4.66% profit. FC proudly state that I'm achieving 4.7%. I would almost certainly have done better in an FSCS protected account, and probably would have been better sticking it under a mattress. Needless to say, I have already started to liquidate my other FC accounts. I'll keep you posted on any significant updates. Update - my loans have now sold. It took 40+ days. I have relisted what I can, but I'm stuck with £3k which is late but not yet declared bad. I have asked FC for a lifetime list of transactions (I have been in since 2012) so that I can take a view on what I paid in versus what I took out. I do know that recent bad debts have been high. I earned £9k in interest in the year 18/19 and lost it all to bad debt. Overall, if I assume the £3k of late loans will turn bad, I have had almost £20k in bad debts, the majority in the last couple of years. Some of the individual loans make eye opening viewing, with interest rates of 15% to 20%, and only a handful of repayments before it went bad. Across my years with FC I have lost 2/3rds of my interest to bad debts. In the early years (when I was keeping a close eye) it wasn't bad. Recently (when my eye was off the ball) it has been terrible. My takeaway is that I should have kept a closer eye on what the loans looked like, I should have restricted my loans to only A and A+ (though plenty of those have also defaulted), I should have pulled out of FC when they said they would list the business (as my opinion was they would take on high risk loans to drive the lending activity up and so underpin a share offering). I will have to keep an FC account for many years to wait and see if there are recoveries. I wonder if they will ever offer a "just give up and go" option, where some 3rd party steps in and offers 25p in the £ to buy you out (or whatever the rate would be). I guess not as it wouldn't be the best marketing (though it would be pragmatic).
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criston
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Post by criston on May 1, 2019 7:40:48 GMT
kcrane; Did you set up more selling on 30/4/19. If so I will add you to the list on my opening post.
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Post by kcrane on May 1, 2019 12:44:55 GMT
Yes, that is right. I will let you know when it sells.
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Stonk
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Post by Stonk on May 1, 2019 13:16:22 GMT
Add me to the list if you like: I requested a sale on 19 April, and will notify this thread when it transacts.
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Post by indexwrangler on May 1, 2019 21:53:04 GMT
I put my remaining loan parts on sale 25/04/2019 just waiting the 40 days again lol. Also I'm not sure how I got this confused but I checked my message history with my friend and it turns out we actually put ours up for sale on the 14 and 15 of march. This means they both took 42 days, not the 40 days I originally said.
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