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Post by westcountryfunder on Dec 13, 2014 16:03:48 GMT
Surely this has been raised before somewhere, but opinions of P2P platforms seem to vary. I see that AC includes the following statement on their tax certificate: "Below is the amount of income you have received in the period 6th April 2013 to 5th April 2014. This is the interest and CASHBACK you have received in the period net of fees. No tax has been witheld. This amount should be supplied as income when you submit your tax return." On the other hand FC says on support.fundingcircle.com/entries/22557912-What-are-the-tax-consequences-of-lending-as-an-individual- " Taxation of cashbackIn certain circumstances Funding Circle offers cashback to investors. The cashback is considered an inducement to enter into a transaction and is received as a direct consequence of having made the loan. Cashback promotions are not normally treated as income and are not subject to income tax or deductions." These two statements so obviously contradict each other. Ok, neither platform claims to be a tax expert and they 'don't give advice' . I am not taking sides, but does anyone know which is correct? |
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Post by westcountryfunder on Dec 13, 2014 17:44:18 GMT
Thanks for that. Silly of me to think it could be monochrome and I hadn't thought of FC's government involvement angle. Perhaps Andrew could raise the point at his forthcoming meeting with HMRC.  Just a thought, but I'm not holding my breath. |
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ianj
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Post by ianj on Dec 14, 2014 6:24:10 GMT
For what it's worth...... Santander offer interest on your account balance, plus up to 3% cashback on certain Direct Debits. For every interest credit on your statement there is a corresponding tax debit. There is no tax debit for any cashback credited. .....and banks are never wrong!  EDIT: There is no tax deducted on cashback received on my credit cards either. |
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pikestaff
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Post by pikestaff on Dec 14, 2014 10:01:03 GMT
The fact that Santander do not deduct tax on cashback payments is not evidence one way or another. Banks and building societies are obliged to deduct tax on interest. A cashback is not interest, so they do not deduct tax. Having said that, I'm reasonably comfortable that their type of cashback, and cashback on credit cards, is not taxable. There are lots of different types of cashback in p2p, some of which are taxable but others may not be. My personal view is: - If it comes from the borrower and is paid to all lenders on the same terms, it's part of the return on the loan and is therefore taxable as income.
- If it comes from the borrower but is an incentive paid only to some lenders (eg early bird discount), it's a reduction in the cost of the loan. This is not taxable as income but would reduce any capital loss in the event of a default.
- If it comes from the platform it's probably not taxable at all although this will depend on the terms. If it's tied to a specific loan it may be regarded as a reduction in the cost of the loan and treated as per the 2nd bullet above.
See also here p2pindependentforum.com/post/7261/thread |
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gon
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Post by gon on Dec 16, 2014 13:23:30 GMT
We note the issue on this thread relates to Assetz Tax Statements and the debate as to whether or not Cashback should be classed as taxable income or not. However, it is not just cashback which is not included in the Tax Statements, they do not take account of transactional overrides, commissions, underwriting fees, monthly overrides etc. Surely these would also be deemed by HMRC as income and therefore should be taxable and consequently should appear on the AC Tax Statements. We have a discrepancy of over £7000 on our account between what we believe is taxable and what AC Tax Statement shows for the same period. We would appreciate some clarity on this if anyone knows the answer please.
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Post by Ton ⓉⓞⓃ on Dec 16, 2014 15:34:37 GMT
We note the issue on this thread relates to Assetz Tax Statements and the debate as to whether or not Cashback should be classed as taxable income or not. However, it is not just cashback which is not included in the Tax Statements, they do not take account of transactional overrides, commissions, underwriting fees, monthly overrides etc. Surely these would also be deemed by HMRC as income and therefore should be taxable and consequently should appear on the AC Tax Statements. We have a discrepancy of over £7000 on our account between what we believe is taxable and what AC Tax Statement shows for the same period. We would appreciate some clarity on this if anyone knows the answer please. Any comment on this chris?
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Post by chris on Dec 16, 2014 15:41:31 GMT
We note the issue on this thread relates to Assetz Tax Statements and the debate as to whether or not Cashback should be classed as taxable income or not. However, it is not just cashback which is not included in the Tax Statements, they do not take account of transactional overrides, commissions, underwriting fees, monthly overrides etc. Surely these would also be deemed by HMRC as income and therefore should be taxable and consequently should appear on the AC Tax Statements. We have a discrepancy of over £7000 on our account between what we believe is taxable and what AC Tax Statement shows for the same period. We would appreciate some clarity on this if anyone knows the answer please. Any comment on this chris? These are all currently classified on the system as "misc payments" so we can't automatically break them apart by the reason they were applied. There's an active project to classify these payments so that we can then correctly include them on the tax statement as this is very much needed for some of our underwriters.
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pikestaff
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Post by pikestaff on Dec 17, 2014 9:18:15 GMT
chris, could I just ask that if and when you do produce a statement with everything in it, you don't call it a tax statement? Something like "statement of earnings" would be fine, just to avoid implying that everything is taxable. Also, please could you ensure that any so-called "pre-drawdown interest" received is shown separately. It is not really interest (because it is not paid on money actually lent), but a commitment fee. This distinction will become important if and when it becomes the norm to deduct tax at source on interest.
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Post by chris on Dec 17, 2014 9:23:06 GMT
chris, could I just ask that if and when you do produce a statement with everything in it, you don't call it a tax statement? Something like "statement of earnings" would be fine, just to avoid implying that everything is taxable. Also, please could you ensure that any so-called "pre-drawdown interest" received is shown separately. It is not really interest (because it is not paid on money actually lent), but a commitment fee. This distinction will become important if and when it becomes the norm to deduct tax at source on interest. At the moment I'm working on being able to generate a statement of everything. I'll then hand that data over to our accountants and tax advisers and ask them what I should be producing and how it'll be presented. Will include your comments for them to see.
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Just a thought, but I'm not holding my breath.
