am
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Post by am on Apr 14, 2016 13:00:58 GMT
The Dublin loan has brought up the question of foreign income. (I don't have much, but I do have enough that I have to declare it separately.)
Can MT assure us that their processes and systems are set up so that tax statements for this and future years will correctly declare foreign income, separately for each country.
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Post by MoneyThing on Apr 14, 2016 14:19:50 GMT
The Dublin loan has brought up the question of foreign income. (I don't have much, but I do have enough that I have to declare it separately.) Can MT assure us that their processes and systems are set up so that tax statements for this and future years will correctly declare foreign income, separately for each country. Afternoon. I can confirm that we will identify any foreign derived income (by country), to lenders within their Tax Statement when applicable. Kind regards, Ed.
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james
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Post by james on Apr 14, 2016 15:44:09 GMT
When doing that please also provide an optional report that shows the ECB or other exchange rate used for each payment on the date of each payment to meet the most detailed version of HMRC's requirements for reporting. Thy don't insist on daily rates but if you're getting set up to do it it's probably easy enough just to grab them from the ECB download. naturally it's nice to include non-UK amount, exchange rate and UK amount in the descriptive notes on the general statements as well. Rates for each currency are linked from www.ecb.europa.eu/stats/exchange/eurofxref/html/index.en.html and if you go to the currency say GBP there is at the bottom right a link to a downloadable XML file that's easy to parse and process automatically. Is updated daily.
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toast
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Post by toast on Apr 14, 2016 16:22:21 GMT
Hm, it didn't cross my mind that this would be foreign income for tax purposes. It's probably a complication I'd like to avoid.
I've not had to do it before, but do I infer that there is a need to file foreign income separately when doing self-assessment? I guess the double-taxation agreement between UK and Ireland means no tax due in Ireland? If future loans were in locations that didn't have double-taxation agreements with UK then I guess lenders might have to report tax in both jurisdictions?
Are there any other complications with foreign income that lenders should bear in mind?
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james
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Post by james on Apr 14, 2016 16:49:39 GMT
Two aspects, income tax and capital gains tax.
For income tax where the taxable income is no higher than £2,000 you just include the gross value of the income in your domestic untaxed interest total and include in a comment at the end of the tax return that x was foreign. Once this total from all sources goes above £2,000 you have to report individually by country, though not by platform. I've done both as applicable for the relevant year.
For capital gains tax see the request about that and the general section discussion but it's not likely to cause any actual tax liability, just paperwork.
There's no "not self-assessment" situation because even having a penny of foreign income triggers the requirement to sign up for self-assessment. I first did it on the basis of a few tens of Pounds.
People who are not already in SA and who don't want to sign up for it should avoid foreign loans. Given that MoneyThing now pays accrued interest on sales it's too late to act once a loan has been fully funded because there will be some interest earned and hence SA signup requirement unless it's sold within the first day before any has accrued. Best route in this situation for anyone who didn't understand the implications is to ask MoneyThing to reverse the investment on the basis that its nature wasn't fully understood.
Special Purpose Vehicles - a company in the middle set up just for this - are one way out of this, with a UK SPV taking the foreign income and paying in Pounds. It's an approach that Ablrate has used. My guess is that MoneyThing may well follow the same route because it gets messy and probably harder to fund such loans given the turn off effect it'll have on those not in SA if it's foreign. SA isn't actually that bad - except see the CGT filing unavoidable stuff - but it still puts people off and did put me off until I thought I was going to make enough for it to be worth the onging hassle.
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ilmoro
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'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 14, 2016 17:22:01 GMT
MoneyThing Who is actually paying the interest to us is it the borrower or MT. Surely if we are lending to MT (which seems to be the case) and therefore it is MT that is paying the interest then it wont be classed as foreign income as MT are UK based for tax purposes arent they? (If they are IOM based then all interested paid by MT would be foreign income AIUI) If it is classed as foreign income then needs a big disclaimer on the loan, warning the tax uneducated that they are going to have to declare it and will be Self Assessment eligible as a result
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Post by MoneyThing on Apr 14, 2016 18:32:11 GMT
MoneyThing Who is actually paying the interest to us is it the borrower or MT. Surely if we are lending to MT (which seems to be the case) and therefore it is MT that is paying the interest then it wont be classed as foreign income as MT are UK based for tax purposes arent they? (If they are IOM based then all interested paid by MT would be foreign income AIUI) If it is classed as foreign income then needs a big disclaimer on the loan, warning the tax uneducated that they are going to have to declare it and will be Self Assessment eligible as a result All foreign loans to date (i.e. those to IOM & S. Irish borrowers), are under our current structure which in effect the interest is being paid to investors by MT (MT is a UK company). As such, none of the interest to date is recorded as foreign income. However, under our new structure (as mentioned in our newsletter), which we will be announcing shortly, all interest paid to lenders is derived directly from the borrowers and therefore should we undertake future lending to a foreign borrower, this interest would be recorded on the platform as foreign income and we would highlight this on the loan particulars prior to launch. Kind regards, Ed
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