Post by IFISAcava on Dec 3, 2017 14:04:05 GMT
I have been reviewing investments today. As a higher/additional rate tax payer, with still some significant money within S&S ISAs, I am going to adopt the following strategy.
1. Although I am happy so far with investments in Lendy, MT, Collateral & Bridge Crowd (all >10% returns pa) and AC (bit less), I am getting out of these to liberate cash.
2. I will then essentially do a reverse bed and ISA - sell funds in the S&S wrapper to liberate cash, and rebuy the stocks outside of the ISA wrapper (small dealing cost) using the cash liberated by selling the Lendy, MT & BC loans mentioned above.
3. I will then transfer the liberated ISA cash into several IFISAs - e.g. ABLrate, Proplend, Relendex, HNWlending (and this month AC)
The ABLrate will likely give me similar risk/returns to Lendy/MT/Collateral, but tax free (so the 12% after tax would be the equivalent of a massive 21.8% pre-tax).
The Relendex/Proplend/HNW ~50% LTV loans end up around 8% or so - which is more than the Lendy/MT rates after tax (12% becomes 6.6%) and at substantially lower risk.
So the net return with this strategy will be higher for less risk.
I lose the S&S tax benefits BUT a) there is still £5000 of tax free dividends to use up, and even after that dividend tax is 38.1% rather than 45% - so better to have dividends rather than interest subject to tax; b) one is exposed to potential capital gains on stocks, but that can be effectively managed by using up the annual CGT allowance. And even if one is subject to CGT, again it is a lower rate than interest (20% v 45%)
I don't really see a downside to this except losing some diversification by platform, but I am already well diversified (http://p2pindependentforum.com/post/231764/thread) and I expect MT, Collateral & Lendy to offer an IFISA at some point, at which time I can consider using their platforms again. There will also be a bit of cash drag on the transfers/reinvestment periods. For people with significant S&S ISA sums and significant P2P outside of ISAs, this seems to me to be a good strategy (not advice etc).
NB: Although I opened a 2017 FS IFISA, I am NOT keeping it and will transfer the money to other IFISAs, because there is a tax-free/tax-reduced exit strategy in FS (again assuming that the annual capital gains allowance isn't exceeded) by selling before term, which I will use. The FS ISA is much less beneficial if you sell out of loans early (as I tend to do).
1. Although I am happy so far with investments in Lendy, MT, Collateral & Bridge Crowd (all >10% returns pa) and AC (bit less), I am getting out of these to liberate cash.
2. I will then essentially do a reverse bed and ISA - sell funds in the S&S wrapper to liberate cash, and rebuy the stocks outside of the ISA wrapper (small dealing cost) using the cash liberated by selling the Lendy, MT & BC loans mentioned above.
3. I will then transfer the liberated ISA cash into several IFISAs - e.g. ABLrate, Proplend, Relendex, HNWlending (and this month AC)
The ABLrate will likely give me similar risk/returns to Lendy/MT/Collateral, but tax free (so the 12% after tax would be the equivalent of a massive 21.8% pre-tax).
The Relendex/Proplend/HNW ~50% LTV loans end up around 8% or so - which is more than the Lendy/MT rates after tax (12% becomes 6.6%) and at substantially lower risk.
So the net return with this strategy will be higher for less risk.
I lose the S&S tax benefits BUT a) there is still £5000 of tax free dividends to use up, and even after that dividend tax is 38.1% rather than 45% - so better to have dividends rather than interest subject to tax; b) one is exposed to potential capital gains on stocks, but that can be effectively managed by using up the annual CGT allowance. And even if one is subject to CGT, again it is a lower rate than interest (20% v 45%)
I don't really see a downside to this except losing some diversification by platform, but I am already well diversified (http://p2pindependentforum.com/post/231764/thread) and I expect MT, Collateral & Lendy to offer an IFISA at some point, at which time I can consider using their platforms again. There will also be a bit of cash drag on the transfers/reinvestment periods. For people with significant S&S ISA sums and significant P2P outside of ISAs, this seems to me to be a good strategy (not advice etc).
NB: Although I opened a 2017 FS IFISA, I am NOT keeping it and will transfer the money to other IFISAs, because there is a tax-free/tax-reduced exit strategy in FS (again assuming that the annual capital gains allowance isn't exceeded) by selling before term, which I will use. The FS ISA is much less beneficial if you sell out of loans early (as I tend to do).
