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Post by proplend on Nov 8, 2018 14:02:25 GMT
proplend - do you have any intention of re-categorising the lender fee charged directly to lenders (which is not deductible for tax) to a loan servicing fee which is tax deductible. My understanding is that re-categorising the fee would be a simple process of re-defining the fee in new loan contract and updating the T&Cs. It seems a easily win and would boost the post tax return to a top rate tax payer by 10%. Hi Nick - It is something we've looked at changing but it's more complicated than it might first appear. And with the current FCA post implementation consultation, it doesn't make sense to make any significant changes now. We took the decision a long time ago to charge a Lender Fee to maximise fee transparency. We pass on ALL borrower interest and we still believe this is the fairest, most transparent approach. Other platforms will indirectly charge Lenders by not passing on the whole rate the borrower is paying. This is less transparent and in most cases will result in a higher fee. So, we are already boosting returns (pre and post tax) by charging the way we do - as well as by offering a tax-free ISA product of course. Richard
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nick
Member of DD Central
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Post by nick on Nov 8, 2018 21:59:15 GMT
proplend - do you have any intention of re-categorising the lender fee charged directly to lenders (which is not deductible for tax) to a loan servicing fee which is tax deductible. My understanding is that re-categorising the fee would be a simple process of re-defining the fee in new loan contract and updating the T&Cs. It seems a easily win and would boost the post tax return to a top rate tax payer by 10%. Hi Nick - It is something we've looked at changing but it's more complicated than it might first appear. And with the current FCA post implementation consultation, it doesn't make sense to make any significant changes now. We took the decision a long time ago to charge a Lender Fee to maximise fee transparency. We pass on ALL borrower interest and we still believe this is the fairest, most transparent approach. Other platforms will indirectly charge Lenders by not passing on the whole rate the borrower is paying. This is less transparent and in most cases will result in a higher fee. So, we are already boosting returns (pre and post tax) by charging the way we do - as well as by offering a tax-free ISA product of course. Richard Hi Richard, thank you for your response. Whilst I welcome the transparency of your fee structure, I believe the same can be achieved by disclosure as all that is happening is a dressing up of the fee to eliminate the tax leakage (any fee charged to a borrower will generally be tax deductible for the borrower but isn't for the lender so it is a real net cost). It just seems crazy not to do so. I take on your point that it make sense to hold making any significant changes until the FCA post implementation consultation and hope you will revisit the issue at that point in time.
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