james
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Post by james on Jan 12, 2017 12:55:01 GMT
Also, on the Tax Statements provided by ablrate , does it detail just the interest or the adjusted figure for accrued interest? The ancient one I have from April 2016 just gives a single gross figure. The new one will presumably be more complete since they do know what is needed. Just a case of getting it in place, though that will presumably not be until after prudent people have already made an estimated tax return. Easy enough to file an estimated one and correct later. Still suffering some development work hangover from the old dev team, I think.
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pikestaff
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Post by pikestaff on Jan 12, 2017 18:56:55 GMT
If you are a UK taxpaying individual, and assuming the loans in question are considered to be "simple debts" Ablrate loans are not simple debts. Their professional advice is that they are securities covered by the Accrued Interest Scheme. Under that scheme the buyer deducts the accrued interest they pay from their interest and the seller pays income tax on it as interest. The rest of your post is wrong because of this initial error. Ablrate has a detailed description of taxation on their platform that's already been linked to. All stevio is after is Ablrate being consistent in what they way and do and getting confirmation that at the moment they aren't, which is so. Apologies. I've found the link now and edited my previous posts. I have some reservations about the analysis in the link, not least the jump from saying that the loans " may fall under the definition of “Securities”" (which is not the same as saying that they are) to saying that they are covered by the Accrued Income Scheme. For ease of reference here is a copy of the link. www.ablrate.com/FAQs/View.aspx?id=75a6e0b4-0a80-443b-af9f-5eb8a2d5cbf9)It would be interesting to know why it is considered that Ablrate loans are or may be securities when this is not widely considered to be the case elsewhere and the HMRC guidance on tax losses assumes that p2p loan parts are simple debts. I think the analysis of Instant Returns is questionable as well. I do not understand how the return (which AIUI is paid even if the loan does not draw) magically changes from being a fee (which would presumably be taxable as income) if the loan does not draw to an adjustment to cost if the loan does draw. It sounds like a commitment fee to me. Since I am not on Ablrate I will leave it at that.
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SteveT
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Post by SteveT on Jan 13, 2017 14:44:31 GMT
I decided to ask FC exactly how they calculate "total interest" and they came back with the following explanation, which is exactly as I understood it to work: "The paid interest amount on your tax statement is made up of:
• Interest from repayments
• Accrued interest gained from a loan part sale
• Recovery Interest payments
It does not include any gains or losses from premiums/discounts, or promotional gains either.
For loan part sales, the seller will see the interest they've accrued for it, whilst the buyer will see their portion of interest they will receive from the next repayment (ie. Total Interest - seller's accrued interest)." I believe this is what the Ablrate "total interest" calculation needs to deliver as well, by deducting any accrued interest purchased from the next interest payment. Tagging ablrate and ablrateandy for information.
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james
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Post by james on Jan 13, 2017 15:12:19 GMT
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SteveT
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Post by SteveT on Jan 13, 2017 15:19:06 GMT
FS has always operated a different model as they pay no interest at all until a loan completes. However there's essentially no difference between the FC and Ablrate models, both paying interest monthly and both having an SM where loans are sold with part-month accrued interest paid by the buyer to the seller.
Bottom line is that, if Ablrate's total interest figure intentionally includes accrued interest sold, it should also deduct accrued interest purchased.
In contrast, the FS approach ignores accrued interest altogether (whether sold or bought).
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stevio
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Post by stevio on Jan 13, 2017 15:22:00 GMT
FS has always operated a different model as they pay no interest at all until a loan completes. However there's essentially no difference between the FC and Ablrate models, both paying interest monthly and both having an SM where loans are sold with part-month accrued interest paid by the buyer to the seller. Bottom line is that, if Ablrate's total interest figure intentionally includes accrued interest sold, it should also deduct accrued interest purchased. In contrast, the FS approach ignores accrued interest altogether (whether sold or bought). Sorry, need to read slower - thought FC was FS! Deleted post as now not relevant, but added this so thread still makes sense
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blender
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Post by blender on Jan 13, 2017 15:43:23 GMT
FC also display an 'accrued interest' figure. This gives comfort to people who wish to see what they have earned and not yet received. I personally think this better than the next instalment, which for example shows only one of the two payments I expect later today. It also helps when you start up and buy loan parts on the SM and your total goes down below what you paid into the platform. It includes the accrued interest you have bought from the seller, and should in due course receive from the borrower - which is not taxable.
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blender
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Post by blender on Jan 13, 2017 21:29:48 GMT
I have just confirmed empirically how the system works for counting interest on the dashboard. We have two accounts, and so can observe buying and selling. Today loan 46 has made a payment and so earlier today I transferred a small residual part from one account to the other via the SM, to see what would happen when the repayment was made later in the day. The selling account received £1.73 from the buying account for accrued interest, which was the whole month, and that went to the interest earned total as expected. The selling account had no further interest in the loan. The buying account had the accrued interest payment rolled up in the payment for the loan, unidentified, and the interest earned total was unchanged. When the monthly repayment was made, thank you Ablrate, the full month's interest was added to the interest earned total of the buying account. So that the accrued interest at the time of the transaction, in this case the whole month's interest, had been added to the interest earned figures on both accounts. This means that for secondary account transactions, the accrued interest gets placed in the interest earned of both parties. So, if you were to add the all time earned interest figures from the accounts of all Ablrate lenders, it should be equal to the total interest paid by borrowers plus the accrued interest of every transaction on the SM. This is not good. Now, when it comes to tax, if we were to report the dashboard interest earned in the last 12 months at 5th April, then our taxable interest would be overstated by accrued interest we have bought in the year, and cumulatively we would all overstate taxable interest by the total of accrued interest for every SM transaction. Ablrate have not said what figures they report for us, but it should not be the figures on our dashboards - because accrued interest is double counted and would be double taxed.It's really time to fess-up Ablrate, and to let us know where we go from here.
Edit - of course the integrity of the accounting is fine and the balances of the accounts are fine. It's just an interest reporting issue, to lenders and possibly to HMRC.
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Post by ablrate on Jan 16, 2017 20:10:12 GMT
Has ABL actually delivered on this template? I've calculated the small amount of accrued I have from this platform but I'd prefer to use the Abl number so not as to risk a discrepancy at the HMRC. If ABL are reporting numbers to the HMRC for tax year 2015/16, they clearly have our individual numbers so why are they not reporting them to us? It's 8-Jan and time is running out. I don't like bumping my own post but it's now the 16th and Abl has delivered precisely zero, yet again on a piece of functionality that should have been provided when they launched in 2014. ablrate : No other bank, broker, P2P platform etc has been unable to achieve the simple task of providing me with a certificate (or email) that provides me with a taxable interest they have declared for my account to the HMRC. Can you please tell me how I can obtain these numbers? Ablrate alone is now holding up my whole self-assessment process and for a trivial amount of money. Thank you. As we said in the recent email we are working on it now. However you have two options: You simply need to email customer services as many people have said here and you will get a statement within 24 hours. Your second option is to download your financial history, filtered for the dates you want and and for accrued interest and interest paid. This forms the basis of our submission ( which is always from the 6 april to 5th April.) Our tax page will basically be exactly the same thing but printable. Hope that helps.
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david42
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Post by david42 on Jan 16, 2017 21:39:56 GMT
Your second option is to download your financial history, filtered for the dates you want and and for accrued interest and interest paid. This forms the basis of our submission ( which is always from the 6 april to 5th April.) Our tax page will basically be exactly the same thing but printable. Hope that helps. ablrate thank you for clarifying what you are telling HMRC. This confirms you are declaring too much interest to HMRC. As blender explained two posts above you double count the accrued interest by treating the accrued interest differently for the buyer and seller of a loan part. If the accrued interest is taxed as income on the seller, then the buyer of a loan part is entitled to a deduction for the accrued interest he has paid the seller for.
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blender
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Post by blender on Jan 16, 2017 22:18:51 GMT
Thank you for your post Ablrate. David42, of course Ablrate knows what the position is. I imagine that the report to HMRC was made some long time ago and is a completed task. Lenders will need to decide what they report for 15/16. Personally, I believe I have reported the same as Ablrate, though it was rolled up with other p2p interest. The HMRC systems for using all this info are not very well developed yet. Perhaps there may be some fine tuning for 16/17.
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littleoldlady
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Post by littleoldlady on Jan 17, 2017 10:18:05 GMT
Lenders will need to decide what they report for 15/16. Personally, I believe I have reported the same as Ablrate, though it was rolled up with other p2p interest. The HMRC systems for using all this info are not very well developed yet.
I suggest that people add an attachment to their return showing details of interest received. Then if the total declared is different from the total of all the platforms' reports to HMRC they can see where the discrepancy is, and can see that you are at least mostly reporting correctly.
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oldgrumpy
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Post by oldgrumpy on Jan 17, 2017 12:57:16 GMT
ablrateHave the instant returns you have noted on my tax statement 2015-2016 been reported to HMRC as interest, or as something else?
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Post by ablrate on Jan 18, 2017 13:08:50 GMT
ablrate Have the instant returns you have noted on my tax statement 2015-2016 been reported to HMRC as interest, or as something else? Hi No, we don't report that. Regards Ablrate
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oldgrumpy
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Post by oldgrumpy on Jan 18, 2017 13:10:47 GMT
Thank you
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