jonah
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Post by jonah on May 9, 2016 5:22:35 GMT
Interesting that the same faq james links to above has SM sales / buys generating both capital gains and losses. Combined with instant returns being a capital gain and this probably makes Abl one of the more complex platforms for those who have used their CGT allowance.
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pom
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Post by pom on May 9, 2016 8:09:49 GMT
This is all getting bonkers...why they don't just call it cashback like everyone else I don't know...and having the SM generate capital gains/losses all over the place wouldn't be so bad (apart from the fact that elsewhere people have been saying they're simple debts not chargeable assets) if there was actually some way to easily identify what you sold during a tax year, let alone what you originally paid for it. I really like ABLrate but as someone who does have to worry about having the right figures for the CGT return pages this lack of clarity is really starting to worry me. ablrate ablrateandy - there have been lots of requests for news on availability of tax certificates and to clarify the simple/chargeable question and very little news. Even if you don't have full answers yet please could we have an update?
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james
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Post by james on May 9, 2016 14:32:04 GMT
why they don't just call it cashback like everyone else I don't know I suspect that their accountant would say that it makes no difference and it's still a discount on the purchase price. What it does mean is that every capital repayment by the borrower is a CGT profit to the original lenders. Lots of those events if it's an amortising loan. if there was actually some way to easily identify what you sold during a tax year, let alone what you originally paid for it For individuals we really need what HMRC wants, which is tracking of the average purchase price for all acquisitions and disposals along with the corresponding profit and loss. HMRC provides some worked examples of this. Of course we also need the correct interest calculations for purchases and disposals done as well. I think that these things may involve quite significant work to provide but do assume that they will be provided eventually. this lack of clarity is really starting to worry me. Doesn't surprise me because there's a fair bit of fiddly detail and experts don't always reply promptly. In general I put it down as one of the hassles of dealing with relatively new P2P firms to get the returns on offer from them, which isn't something that I limit to just Ablrate.
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Post by meledor on May 9, 2016 16:18:52 GMT
This is all getting bonkers... I completely agree. Ablrate have ended up in a very different tax place than anybody else which looks incredibly complex.
I am going to take this at face value as being only an "opinion", intended to be a "guide" caveated with disclaimers. I have my own opinion and as I accept the point made in the disclaimer that I am responsible to the HMRC for my tax affairs I will continue as I have done for the last couple of years to declare "instant returns" as interest. One hopes that eventually HMRC will get round to tidying these things up for the benefit of the P2P sector. It is actually better for me to treat "instant returns" as interest rather than capital gain (on sale or at maturity). Added to which having completed the capital gains section of the tax return for the last umpteenth years I have no desire to see any further complication. In fact were this "opinion" to be confirmed then other things (in terms of return and risk) being equal I would lend elsewhere to avoid the capital gains treatment.
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pom
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Post by pom on May 9, 2016 17:32:05 GMT
This is all getting bonkers... I completely agree. Ablrate have ended up in a very different tax place than anybody else which looks incredibly complex.
I am going to take this at face value as being only an "opinion", intended to be a "guide" caveated with disclaimers. I have my own opinion and as I accept the point made in the disclaimer that I am responsible to the HMRC for my tax affairs I will continue as I have done for the last couple of years to declare "instant returns" as interest. One hopes that eventually HMRC will get round to tidying these things up for the benefit of the P2P sector. It is actually better for me to treat "instant returns" as interest rather than capital gain (on sale or at maturity). Added to which having completed the capital gains section of the tax return for the last umpteenth years I have no desire to see any further complication. In fact were this "opinion" to be confirmed then other things (in terms of return and risk) being equal I would lend elsewhere to avoid the capital gains treatment.
Except that if the instant returns were in fact cashback they'd then be tax free (assuming they were an incentive paid by the platform and not extra interest paid by the borrower anyway) so shouldn't really come under income tax either.
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jonah
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Post by jonah on May 9, 2016 19:31:34 GMT
This is all getting bonkers... I completely agree. Ablrate have ended up in a very different tax place than anybody else which looks incredibly complex.
Now, lets say you have a 5 yr amortising loan, which had instant returns on. Calculating the capital gain, per month, will be fun. Then say you buy another piece of that loan as you like it after a year, but have to pay a 0.5% premium, so 100.5%, or worse at a 0.5% discount. How you would then calculate the correct position then I would dread to think. Especially as unless you have offline copies of all the data, you would be clicking through the non downloadable, non summarised financial history to find all the relevant numbers (I really hope that gets fixed soon). I've not bought / sold on Ablrate's SM at anything but 100%. If this position is correct, then I will be sticking very much to that rule. I'll also be thinking very hard before bidding on anything which amortises. This takes a platform I was wanting to get more money into to one which I'm not quite so sure.
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Post by meledor on May 9, 2016 20:24:49 GMT
I completely agree. Ablrate have ended up in a very different tax place than anybody else which looks incredibly complex.
I am going to take this at face value as being only an "opinion", intended to be a "guide" caveated with disclaimers. I have my own opinion and as I accept the point made in the disclaimer that I am responsible to the HMRC for my tax affairs I will continue as I have done for the last couple of years to declare "instant returns" as interest. One hopes that eventually HMRC will get round to tidying these things up for the benefit of the P2P sector. It is actually better for me to treat "instant returns" as interest rather than capital gain (on sale or at maturity). Added to which having completed the capital gains section of the tax return for the last umpteenth years I have no desire to see any further complication. In fact were this "opinion" to be confirmed then other things (in terms of return and risk) being equal I would lend elsewhere to avoid the capital gains treatment.
Except that if the instant returns were in fact cashback they'd then be tax free (assuming they were an incentive paid by the platform and not extra interest paid by the borrower anyway) so shouldn't really come under income tax either.
I think the difference between instant returns and cashback is that the latter is based only on principal amount and a percentage, whereas the former introduces a time period over which it is accrued. This factor (that instant returns are calculated by reference to the time value of money) is one of 3 features used to identify HMRC's definition of 'disguised interest'. Another is that instant returns are paid regardless of whether the loan goes ahead or not, unlike a cashback or fee arrangement.
I expressed some surprise when Ablrate introduced instant returns as it did not seem as if the tax implications had been thought through. It may be that some were hoping that it would be akin to a cashback; the fact that it is now being suggested that it is a capital gain is the worst of all worlds.
Over half my instant returns were in connection with the aborted ATR 42 loan last summer. The 'opinion' suggests that the amount should reduce the outlay and be accounted for as a capital gain on sale or maturity. But there was no sale or maturity because there was no loan. The 'opinion' is surely losing touch with reality in my opinion if it is indeed suggesting that the amount of instant returns should still be declared as a chargeable gain when there has not been a disposal.
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johnfleet
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Post by johnfleet on May 31, 2016 18:20:02 GMT
My question is a much simpler one. When do we get to receive our 'instant' returns? Are they paid (monthly?) prior to the loan drawing down or are the amounts rolled up until that point? - or something else entirely?
John
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SteveT
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Post by SteveT on May 31, 2016 18:32:34 GMT
My question is a much simpler one. When do we get to receive our 'instant' returns? Are they paid (monthly?) prior to the loan drawing down or are the amounts rolled up until that point? - or something else entirely? John Normally paid in one go at the point the loan draws down. I think there may have been an aircraft loan a year or so ago that paid something "on account" but that was a one-off that had taken an age even to part-fill (IIRC)
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