j1
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Post by j1 on May 2, 2017 20:39:37 GMT
Selling on the SM...
1. What discount do I need to offer to break even as a 40% tax payer?
A working example would be great!
2. From experience, what discount does one need in order to get loan parts that are likely to complete without issue sold with 1 month remaining?
Thanks!
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Liz
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Post by Liz on May 2, 2017 20:49:34 GMT
Anything with a discount of 0.9% is selling. That should be your starting point. You will have earned 5%(12% loan) for holding for 5 months less 0.9%, so 4.1% or 9.84% annualised with no default risk.
Paying tax on that 5% @ 40% would leave 3% or 7.2% annualised with default risk.
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ozboy
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Mine's a Large One! (Snigger, snigger .......)
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Post by ozboy on May 2, 2017 21:00:20 GMT
Anything with a discount of 0.9% is selling. That should be your starting point. You will have earned 5%(12% loan) for holding for 5 months less 0.9%, so 4.1% or 9.84% annualised with no default risk. Paying tax on that 5% @ 40% would leave 3% or 7.2% annualised with default risk. Thanks Liz! Nice simple example that Worzel here can follow, I might now engage in some Selling on FS. 
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p2pmark
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Post by p2pmark on May 3, 2017 8:20:08 GMT
Anything with a discount of 0.9% is selling. That should be your starting point. You will have earned 5%(12% loan) for holding for 5 months less 0.9%, so 4.1% or 9.84% annualised with no default risk. Paying tax on that 5% @ 40% would leave 3% or 7.2% annualised with default risk. Thanks Liz! Nice simple example that Worzel here can follow, I might now engage in some Selling on FS. I had thought that the tax was transferred at the point of sale. So there would be no tax due even for a 40% taxpayer. Is that not right?
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stub8535
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personal opinions only. Not qualified to advise on investment products.
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Post by stub8535 on May 3, 2017 9:18:01 GMT
You lose the liability to income tax on sale. It is a gain shown in another box. The holder at term is responsible for tax on all the interest on the part purchased.
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mikes1531
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Post by mikes1531 on May 6, 2017 16:23:03 GMT
It is a gain shown in another box. Doesn't that depend on how the part was acquired? AFAIK, if the part was bought on the SM then the difference between the purchase price and the sale price is a capital gain or loss. And if the part was bought on the PM -- i.e. when the loan was made -- it is a 'simple debt' and there is no tax consequence at all. If the latter is correct, does it apply to renewal loans as well? (i.e. Is a renewal, a continuation of an earlier simple debt, or the ending of one simple debt and the start of another?)
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dzo
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Post by dzo on May 6, 2017 17:12:51 GMT
It is a gain shown in another box. Doesn't that depend on how the part was acquired? AFAIK, if the part was bought on the SM then the difference between the purchase price and the sale price is a capital gain or loss. And if the part was bought on the PM -- i.e. when the loan was made -- it is a 'simple debt' and there is no tax consequence at all. If the latter is correct, does it apply to renewal loans as well? (i.e. Is a renewal, a continuation of an earlier simple debt, or the ending of one simple debt and the start of another?) I don't think it's that clear cut. FS just say that HMRC might consider it trading if you buy and sell on the SM. As far as I know, they don't report any capital gains to HMRC so it's up to investors decide how to report it.
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Liz
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Post by Liz on May 8, 2017 23:03:17 GMT
Discounts gone crazy! SM is officially dumb.
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SteveT
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Post by SteveT on May 9, 2017 6:35:00 GMT
Discounts gone crazy! SM is officially dumb. Oh, how I wish I could offer up some overdue parts at 0.1% discount 
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Liz
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Post by Liz on May 9, 2017 12:46:06 GMT
I've come to the conclusion that my SM isn't listing the first 10 pages(I list by discount), those with decent discounts.
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mikes1531
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Post by mikes1531 on May 9, 2017 18:54:21 GMT
I've come to the conclusion that my SM isn't listing the first 10 pages(I list by discount), those with decent discounts. I sort my list by effective rate -- and I seem to have the same problem!
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