blender
Member of DD Central
Posts: 5,719
Likes: 4,272
|
Post by blender on Apr 2, 2016 21:23:31 GMT
As an ex submariner (HMS Warspite in the late 60/70s), a couple of comments on the above. .... Kudos ! But what is so wrong with Faslane ? You need to go back to my post of 5th November, which suggested that tax paid on instant returns might be wasted on abominable underwater weapons. The discussion has not progressed much, though it is interesting to hear that rogerbu lived in a yellow submarine. Whether instant returns should be subject to income tax is still an unanswered question - and I doubt that Ablrate will wish to give advice. You could consider that you are lending money to the platform and they are paying interest, or you could consider that the money is not for the use of the platform, but rather the borrower, and the instant returns from the platform are an incentive to lend which is paid in way which looks like interest but isn't. Obtaining tax advice would probably cost more than the amount of tax on the instant returns.
|
|
rogerbu
Member of DD Central
Posts: 398
Likes: 213
|
Post by rogerbu on Apr 3, 2016 7:27:36 GMT
Whether instant returns should be subject to income tax is still an unanswered question - and I doubt that Ablrate will wish to give advice. You could consider that you are lending money to the platform and they are paying interest, or you could consider that the money is not for the use of the platform, but rather the borrower, and the instant returns from the platform are an incentive to lend which is paid in way which looks like interest but isn't. Obtaining tax advice would probably cost more than the amount of tax on the instant returns. With the lack of a Tax Statement from Ablerate, I have no better information than to believe Ablerate's dashboard number - Last 12 months interest earned. That is what I will declare until an official statement is available.
|
|
blender
Member of DD Central
Posts: 5,719
Likes: 4,272
|
Post by blender on Apr 3, 2016 22:36:29 GMT
I agree that you (we) should not get into difficulty by relying on that. Personally, I am not qualified to report anything different, even though it is less than half of my Ablrate earnings.
|
|
jonah
Member of DD Central
Posts: 2,031
Likes: 1,113
|
Post by jonah on Apr 4, 2016 5:11:27 GMT
Doesn't Ablrate have to report to hmrc for interest for each lender though? Surely if they can do that, we should be able to get a view as 'our' number should be the same?
|
|
james
Posts: 2,205
Likes: 955
|
Post by james on Apr 4, 2016 6:46:37 GMT
Doesn't Ablrate have to report to hmrc for interest for each lender though? Surely if they can do that, we should be able to get a view as 'our' number should be the same? It is not yet clear what should be reported for secondary market transactions. A buyer pays something called accrued interest to the seller. Is that interest for the seller? Is that deducted from the interest received by the buyer from the borrower? I suggested that the accrued interest is just a loan from the buyer to the seller and the seller really gets the interest paid when the borrower pays and that is repaying the accrued interest loan. An alternative way that can be used is that the buyer increases the capital payment, then the seller has a capital gain that is probably tax free and the buyer pays income tax on the accrued interest paid to the seller as part of the purchase price, a deal that is not fair to the buyer. Which is why Ablrate was taking advice on how to handle this well.
|
|
blender
Member of DD Central
Posts: 5,719
Likes: 4,272
|
Post by blender on Apr 4, 2016 7:53:18 GMT
Doesn't Ablrate have to report to hmrc for interest for each lender though? Surely if they can do that, we should be able to get a view as 'our' number should be the same? It is not yet clear what should be reported for secondary market transactions. A buyer pays something called accrued interest to the seller. Is that interest for the seller? Is that deducted from the interest received by the buyer from the borrower? I suggested that the accrued interest is just a loan from the buyer to the seller and the seller really gets the interest paid when the borrower pays and that is repaying the accrued interest loan. An alternative way that can be used is that the buyer increases the capital payment, then the seller has a capital gain that is probably tax free and the buyer pays income tax on the accrued interest paid to the seller as part of the purchase price, a deal that is not fair to the buyer. Which is why Ablrate was taking advice on how to handle this well. Yes there is that issue in addition to instant returns. But I do actually agree with rogerbu that, in the absence of a full tax statement from Ablrate, the average income tax paying lender need not predict what the experts may decide, and is reasonably entitled to take a screenshot on 5th April of the interest received in the last 12 months figure and declare that. OK there may be future corrections, but surely that is the limit of any difficulties for the lender. If Albrate report some other number to hmrc, then they would surely also tell the lender. Anyone can be an Ablrate lender. We cannot be expected to have such expertise or to buy advice.
|
|
james
Posts: 2,205
Likes: 955
|
Post by james on Apr 4, 2016 10:29:39 GMT
Yes, I agree that anyone can use the Ablrate number. Or anyone can instead use an alternative which they believe is correct. In either case if it changes they get to tell HMRC. I'm going to file on around 6 April anyway with estimates that I won't be able to resolve fully for several months so I'll just give my estimate and include this as one of the areas of uncertainty, part of "reconciling my monthly interest calculations with annual statements from providers". Not planning to wait for certainty on everything before getting thousands of Pounds out of HMRC. For most people I doubt that there's any big time issue because most can tell HMRC by letter or tax return nearer to January next year without losing money. Just those of us who want to get in early to get money back from HMRC who end up affected more, along with anyone who likes to be really prompt just as a matter of discipline. Though I expect that most of us just want it done I doubt that's enough reason to want it done but not in the most advantageous way.
|
|
blender
Member of DD Central
Posts: 5,719
Likes: 4,272
|
Post by blender on Apr 4, 2016 10:43:16 GMT
Yes, I agree that anyone can use the Ablrate number. Or anyone can instead use an alternative which they believe is correct. ... The alternative would presumably be a higher number. In 2016/7 the position will be complicated by income tax relief on losses and tax on recoveries. The lack of a proper tax statement will be unsustainable. This should be a real incentive to Ablrate to avoid losses and avoid the problem.
|
|
james
Posts: 2,205
Likes: 955
|
Post by james on Apr 4, 2016 10:53:28 GMT
Could be either higher or lower, depends on what the cause of the differences is. I've bought loans and sold loans so I will decide what treatment I think is right for accrued interest as buyer and seller. With the accrued interest from sales alone being around a third of the interest total shown by Ablrate that'll make some difference to me. In this case I'll be treating it as interest and reporting the higher number but I do track the two independently. Then when buying I have to do the corresponding adjustment for the purchase price to strip out the accrued interest that I paid the seller and Ablrate doesn't provide that number conveniently anywhere. If I don't do that I'm treating the same payment type in two different ways in the same claim: interest if seller, capital if buyer. All of which is part of why I want Ablrate to take their time and get it right. There's no permutation of accrued interest, interest and instant returns that gets me to a number that matches Ablrate's number but I don't yet have a number for the accrued interest amount paid when buying a loan so maybe that'll make things consistent. More likely once Ablrate have done their version I'll try to reconcile the two then bug ablrateandy to help me get them perfectly reconciled to see if that leads to discovering bugs/whatever to fix.
|
|
blender
Member of DD Central
Posts: 5,719
Likes: 4,272
|
Post by blender on Apr 4, 2016 11:44:33 GMT
Wow! I hope you are dealing with large numbers to make that worth doing. Even when Ablrate have finally decided the correct way to to calculate the tax return for income tax payers, and have made provision for the new losses and recoveries taxation, then I imagine there will be a complex and perhaps costly development by the Geeks.
|
|
james
Posts: 2,205
Likes: 955
|
Post by james on Apr 4, 2016 14:03:14 GMT
In a past job I spent a fair amount of time working on accounting software for ship owners. I like it when the numbers add up correctly and consistently.
|
|
|
Post by oktaeder on May 5, 2016 16:27:35 GMT
Can somebody explain the following calculation (2nd one)
05/05/2016 16:55 Instant returns £0.66 £829.82 Instant Return payment for £250.00 invested on Basket of Secured loans for 8 days. 05/05/2016 16:55 Instant returns £1.18 £830.35 Instant Return payment for £400.00 invested on Basket of Secured loans for 9 days.
Negative returns?
BTW the same happened before:
04/04/2016 15:43 Instant returns £0.03 £0.52 Instant Return payment for £17.00 invested on Portacabin Finance for 5 days. 04/04/2016 15:43 Instant returns £0.61 £1.09 Instant Return payment for £340.00 invested on Portacabin Finance for 5 days.
|
|
|
Post by ablrateandy on May 5, 2016 17:53:19 GMT
It's a glitch where if there are multiple payments, the total shown falls behind but it will show as correct on your Available Balance. It resolves on your next transaction. I have bumped your account so it is now correct.
|
|
|
Post by oktaeder on May 5, 2016 19:54:20 GMT
Thank you Andy. Yes, available funds was correct before. If you look there
|
|
james
Posts: 2,205
Likes: 955
|
Post by james on May 8, 2016 21:10:18 GMT
ablrate , ablrateandy would one of you confirm that the FAQ entry What is the Tax Position? is from your recent check please and not some old version? If so, thanks A date stamp would be a nice addition to FAQ s also. Next stop is to ask when Ablrate's tax reporting will reflect those opinions? The portion relevant to instant returns says that they are not interest but rather a discount on the purchase price so both secondary sales at par or above the discount and normal repayments by borrowers will create an item that needs to be tracked in CGT reporting. This is generally beneficial to most individuals who are unlikely to have a CGT liability in most years. The treatment seems reasonable and sensible to me. " Instant Returns
Instant returns are based on an amount and time period (for more information see here). The opinion we have received is that Instant Returns, because they are not based on a loan closing (we pay them regardless of the loan closing or not), then they are not seen as 'Interest'.
To account for these as tax, the opinion is that Instant Return should be treated as 'fee' and counted as a discount to the capital you have purchased. This means that upon the sale of that loan you would be crystallizing a capital gain and it should be reported as such.
As an example;
On the first day of a loan listing you buy £10,000 of the loan paying 12% p.a on the primary market which has Instant Returns enabled. On closing of that loan (lets assume it is listed for 1 month and closes at the 1 month mark. You would receive £100 in Instant Returns.
This means you have bought the loan for £9,900. When you sell the loan (if you sell at 100% on the secondary market, or run it to the end of the term) you will have a gain of £100 on your capital. This would, in the opinion of our accountants, be a capital gain."
|
|