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Post by GSV3MIaC on Apr 9, 2016 11:47:25 GMT
I just looked at mine, and am well confused .. interest earned, yes, OK, taxable
Microloan sale profits/losses .. not aware this is taxable as income (possibly as Capital gain, if large) .. FC certainly don't think it is?
Deductions for bad debt .. ReBS seem to have deducted this from tax owed (20% of interest+loan sale gains) .. I though it was deductible from "income to be taxed", not from the actual tax to be paid. Am I confused? I mean I'd much rather HMG funded the whole of my losses, but it hardly seems credible?
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Post by danraj on Apr 21, 2016 15:57:48 GMT
Our apologies for any confusion caused.
Tax statement is now updated to be clearer.
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nick
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Post by nick on Apr 21, 2016 18:37:11 GMT
At which point is a deduction made for bad debt? The deductions for bad debt on my tax statement (nil) do not tally with the bad debt recorded on my dashboard (lots)....any ideas?
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Post by danraj on Apr 22, 2016 9:26:46 GMT
It becomes deductible in the tax year that the Bad Debt is declared.
I.e. the date that the platform (or majority of lenders through a vote) decide to stop pursuing the debt and recognise it as unrecoverable.
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nick
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Post by nick on Sept 12, 2016 20:16:09 GMT
danraj: I've noticed that capital gains figures on microloan sales are now provided on our tax statements. My understanding from HMRC guidance is that simple debts (ie those that aren't securities which I believe all loans on the platform are) are not chargeable assets in the hands of the original lender (although they maybe chargeable if you are not the original lender, eg if you purchase on the SM and resell). Are you able to confirm whether or not loan parts originated on the platform are simple debts versus securities or the basis of your presumption that the disposal of loan parts are chargeable in the hands of the original lender?
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binkle
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Post by binkle on Sept 14, 2016 20:57:38 GMT
It becomes deductible in the tax year that the Bad Debt is declared. I.e. the date that the platform (or majority of lenders through a vote) decide to stop pursuing the debt and recognise it as unrecoverable. presume this guidance is not quite the one to take as gospel anymore?
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james
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Post by james on Sept 21, 2016 0:28:11 GMT
It becomes deductible in the tax year that the Bad Debt is declared. I.e. the date that the platform (or majority of lenders through a vote) decide to stop pursuing the debt and recognise it as unrecoverable. Why is this definition different from the one HMRC uses, which is deemed "irrecoverable" without legal action? That's a long time before giving up on pursuing the debt and writing if off. By the HMRC definitions as soon as normal debt collection without legal action ends, and the legal process starts, that loan is now eligible to be deducted, with any recoveries of capital later taxable as income. I'm not on this platform but if I was and that was how you were reporting to HMRC, I'd be doing my own calculations instead of relying on yours.
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pikestaff
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Post by pikestaff on Sept 21, 2016 6:21:54 GMT
danraj To expand on james 's comment, the point is that under the old rules for capital loss claims the loan would have to actually be irrecoverable (the test you appear to be applying), but for loss claims against income, there is a new definition of irrecoverable as "irrecoverable other than by legal proceedings or by the exercise of any right granted by way of security for the loan". According to HMRC's guidance this means a loan is treated as irrecoverable in either of the following situations: "Loans with securityWhen loans are made against security, a loan may be treated as becoming irrecoverable as if the security did not exist. Loans where legal recovery action is takenWhen the borrower has entered legal recovery procedures such as liquidation, administration, receivership or bankruptcy the loan may be treated as becoming irrecoverable as if such action was not available." I suggest you look at p2pindependentforum.com/post/104652/thread where I discuss this further, and p2pindependentforum.com/post/107646/thread which appears to reflect advice Funding Knight received from HMRC. For the 2015/16 tax year, lenders can claim under either the old rules (if of any use to them) or the new ones, so it's not necessarily wrong to give lenders the info on the old basis but you should make clear what you are doing. If I were on the platform I'd like info on the new basis.
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binkle
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Post by binkle on Sept 22, 2016 19:07:31 GMT
That was what I was thinking. Would value confirmation that ReBs may review... Before December!
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