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 Apr 11, 2024 6:51:21 GMT
There are many basic inequities in the P2P rules: Surely these should be taken into account when interpreting them in an equitable manner on the assumption there was never an intention to disadvantage or financially penalise P2P lenders by supposedly simplifying P2P lending ? Eg: P2P losses are offset against interest income but they are strictly restricted to only P2P interest. Losses are not offsettable against other interest such as bank, building society and share interest. If not enough P2P interest is available to offset the loss the loss can only be carried forward for 4 years. Losses on non P2P loans and CG losses in general can be carried forward forever. Others? Possibly we can assemble a strong case for letting Failed P2P like Lendy be treated as CG losses. Disclosure: £51k lost with Lendy. Capital gains is only 4 years AIUI www.gov.uk/capital-gains-tax/losses
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Post by bracknellboy on Apr 11, 2024 7:12:13 GMT
There are many basic inequities in the P2P rules: Surely these should be taken into account when interpreting them in an equitable manner on the assumption there was never an intention to disadvantage or financially penalise P2P lenders by supposedly simplifying P2P lending ? Eg: P2P losses are offset against interest income but they are strictly restricted to only P2P interest. Losses are not offsettable against other interest such as bank, building society and share interest. If not enough P2P interest is available to offset the loss the loss can only be carried forward for 4 years. Losses on non P2P loans and CG losses in general can be carried forward forever. Others? Possibly we can assemble a strong case for letting Failed P2P like Lendy be treated as CG losses. Disclosure: £51k lost with Lendy. Capital gains is only 4 years AIUI www.gov.uk/capital-gains-tax/lossescapital gains loss carry forward is indefinite. But the loss must be registered within four years of it occurring (unless it was before a certain date that IIRC was sometime in the 90s, in which case it can be registered / claimed at any time, but good luck in finding the supporting evidence for it). To clarify: the words used in that link are easily misunderstood IMO, because of it mixing 'reporting' and 'claim' in the same sentence. The bit where it cites 4 years is though referring specifically to the reporting or claiming of the loss, not subsequently using that claimed loss to offset a capital gain. The below edited (completely reworded) to correct:Note that if you have capital gain in the year of a loss, the loss must be used first to offset before use of the annual allowance. In subsequent years you can use your annual allowance before utilising loss carry forward. Example: - I have a capital loss in year 1 of £20k, and an annual exempt allowance of £12.3k (old number), and a capital gain of £11k. I don't pay any tax, but I am deemed to have utilised £11k of my loss and my AEA for that year lapses. This is as you would expect since it is 'net gain' in that year that is subject to CGT. - In year 2 I have no additional loss, a gain of £15k, and an AEA of £12.3k. I have no CGT to pay and I have used my £12.3K AEA and £2.7k of the carry forward leaving me with £8.3k of loss carry forward.
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qwakuk
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Post by qwakuk on Apr 11, 2024 8:29:32 GMT
capital gains loss carry forward is indefinite. But the loss must be registered within four years of it occurring (unless it was before a certain date that IIRC was sometime in the 90s, in which case it can be registered / claimed at any time, but good luck in finding the supporting evidence for it). To clarify: the words used in that link are easily misunderstood IMO, because of it mixing 'reporting' and 'claim' in the same sentence. The bit where it cites 4 years is though referring specifically to the reporting or claiming of the loss, not subsequently using that claimed loss to offset a capital gain. There is also a small twist in the tail of that indefinite carry forward. When you have a capital gain in any TY and you don't pay CGT on some or all of it, the order of precedence is that you are deemed to first be using any prior capital loss before any of your annual CGT allowance (Annual Exempt Allowance, AEA). As a simple example and pulling the numbers out of thin air because I can't be bothered to go and look up the ever changing (reducing) CGT allowances: - I have a capital loss in year 1 of £20k, and no capital gains - I have a capital gain in year 2 of £10k, and an AEA of £12.3k in that year (the old number: I just looked it up). I don't have to pay any CGT. BUT I have used £10k of my prior loss offset, rather than made any use of that years allowance which is instead lost. - the following year I have a £15k gain and an AEA of £12.3k. I don't pay any tax, but I have used up the remaining £10k of my prior loss carry forward, and only £2.3k of my AEA. - the following year I have another £15k, and an AEA of £6k. I have to pay CGT on £9k because I have no remaining loss carry forward and have only the AEA available. I think this is wrong, brought forward losses only reduce you down to AE level so in year 2 no losses would be used If in Yr2 profit was only £10k it would be covered by the AE and full £20k loss from Yr1 get carried forward entirely
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Post by bracknellboy on Apr 11, 2024 9:52:19 GMT
capital gains loss carry forward is indefinite. But the loss must be registered within four years of it occurring (unless it was before a certain date that IIRC was sometime in the 90s, in which case it can be registered / claimed at any time, but good luck in finding the supporting evidence for it). To clarify: the words used in that link are easily misunderstood IMO, because of it mixing 'reporting' and 'claim' in the same sentence. The bit where it cites 4 years is though referring specifically to the reporting or claiming of the loss, not subsequently using that claimed loss to offset a capital gain. There is also a small twist in the tail of that indefinite carry forward. When you have a capital gain in any TY and you don't pay CGT on some or all of it, the order of precedence is that you are deemed to first be using any prior capital loss before any of your annual CGT allowance (Annual Exempt Allowance, AEA). As a simple example and pulling the numbers out of thin air because I can't be bothered to go and look up the ever changing (reducing) CGT allowances: - I have a capital loss in year 1 of £20k, and no capital gains - I have a capital gain in year 2 of £10k, and an AEA of £12.3k in that year (the old number: I just looked it up). I don't have to pay any CGT. BUT I have used £10k of my prior loss offset, rather than made any use of that years allowance which is instead lost. - the following year I have a £15k gain and an AEA of £12.3k. I don't pay any tax, but I have used up the remaining £10k of my prior loss carry forward, and only £2.3k of my AEA. - the following year I have another £15k, and an AEA of £6k. I have to pay CGT on £9k because I have no remaining loss carry forward and have only the AEA available. I think this is wrong, brought forward losses only reduce you down to AE level so in year 2 no losses would be used If in Yr2 profit was only £10k it would be covered by the AE and full £20k loss from Yr1 get carried forward entirely I either misread what I read on the HMRC forum or extrapolated when it wasn't correct to do so, or the particular item I read was incorrect (the latter is less likely as I'm sure I would only have taken as read something posted by an HMRC admin). I (now) agree with you that utilisation of losses ahead of AEA is only required in the year of the loss, not in subsequent years. And this is much more in line with what I had originally thought before I read that item a number of weeks ago (basically you are taxed on net gain in the year, minus annual exemption, and then able to utilise carried forward losses). To wit: "Only losses that occur in the same year must be utilised first before using any of the annual exempt amount." It does say "occur" so not sure whether that actually means 'the year of the loss' or the year of the report/claim of the loss. But the logic of 'net gain' would imply the actual year of the loss. I will adjust my post accordingly so it doesn't mislead anyone else. This one I just found (different to the one I looked at a number of weeks ago) does state the situation pretty clearly: Different HMRC forum discussion
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mah
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Post by mah on Apr 13, 2024 14:56:25 GMT
On a side note, can one use any Capital Loss from an ISA or SIPP to offset Capital Gains in a standard Account (GIA) ?
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IFISAcava
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Post by IFISAcava on Apr 13, 2024 14:58:59 GMT
On a side note, can one use any Capital Loss from an ISA or SIPP to offset Capital Gains in a standard Account (GIA) ?
no
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mah
Member of DD Central
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Post by mah on Apr 13, 2024 15:03:12 GMT
Thought ISA wasn't allowed as it's Tax Free anyway, but wasn't sure about a SIPP - Thanks for the confirmation.
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