rogerthat
Member of DD Central
Posts: 2,048 
Likes: 1,994
|
Post by rogerthat on Mar 18, 2018 17:35:11 GMT
I bought a sizeable chunk on Friday, having transfered funds to the IFISA, and noted that loan parts were available, in the same loan, all the way from 1% discount through to 1% premium. Do I get a prize for guessing you didn't buy the 1% premium ? 
|
|
Godanubis
Member of DD Central
Anubis is known as the god of death and is the oldest and most popular of ancient Egyptian deities.
Posts: 2,011
Likes: 1,013
|
Post by Godanubis on Mar 18, 2018 18:05:20 GMT
The SM is only crazy because anyone who has funds that are due to mature early next year in their main account and their other income is near the 40% tax bracket they will not want the loans to pay after April 5th as they would end up paying 40% Tax, rather than usual -1% selling as loan reaches maturity because it offers >20% return for those with money in their FISA. to buy the bargains, (Bring back the -4% ) |
|
mouse
Posts: 55
Likes: 29
|
Post by mouse on Mar 19, 2018 12:02:50 GMT
At the time the premium/discount range was tightened to +/- 1% many concluded it was, at least in part, a means to protect lenders from transferring parts to the IFISA at a level significantly adrift of the "open market" price. That concern still applies, but I think FS could legitimately argue (to HMRC) that discounts of upto 2% were still representative of open market pricing. I've quoted several times the rough rule of thumb that the inherited basic rate tax liability on a 12% loan part is very approximately equivalent to a 0.1% discount per 15 days age of the loan part. That means at the five month mark, a discount of c. 1% covers the basic rate tax liability being inherited, but for a higher rate tax payer a discount of c. 2% would be needed to cover the inherited tax liability. fundingsecure it would be good if you could give some further consideration to this, allowing discounts of up to 2% will open up a wider pool of potential SM purchasers. mrclondon or anyone so what discount on a std 12% 6 mnth loan , would be attractive to higher rate taxpayer for a loan that was 80 days old Is it twice the figure for a basic rate payer ? thnx
|
|
|
|
Post by mrclondon on Mar 19, 2018 12:12:23 GMT
At the time the premium/discount range was tightened to +/- 1% many concluded it was, at least in part, a means to protect lenders from transferring parts to the IFISA at a level significantly adrift of the "open market" price. That concern still applies, but I think FS could legitimately argue (to HMRC) that discounts of upto 2% were still representative of open market pricing. I've quoted several times the rough rule of thumb that the inherited basic rate tax liability on a 12% loan part is very approximately equivalent to a 0.1% discount per 15 days age of the loan part. That means at the five month mark, a discount of c. 1% covers the basic rate tax liability being inherited, but for a higher rate tax payer a discount of c. 2% would be needed to cover the inherited tax liability. fundingsecure it would be good if you could give some further consideration to this, allowing discounts of up to 2% will open up a wider pool of potential SM purchasers. mrclondon or anyone so what discount on a std 12% 6 mnth loan , would be attractive to higher rate taxpayer for a loan that was 80 days old Is it twice the figure for a basic rate payer ? thnx Correct, for a 40% tax payer, the inherited tax liability is c. 0.1% discount per 7.5 days age of the loan part, so at 80 days, a 1% discount more or less covers the inherited tax liability
|
|
mouse
Posts: 55
Likes: 29
|
Post by mouse on Mar 19, 2018 12:23:26 GMT
mrclondon or anyone so what discount on a std 12% 6 mnth loan , would be attractive to higher rate taxpayer for a loan that was 80 days old Is it twice the figure for a basic rate payer ? thnx Correct, for a 40% tax payer, the inherited tax liability is c. 0.1% discount per 7.5 days age of the loan part, so at 80 days, a 1% discount more or less covers the inherited tax liability thnx for confirming that mrclondon
|
|
Godanubis
Member of DD Central
Anubis is known as the god of death and is the oldest and most popular of ancient Egyptian deities.
Posts: 2,011
Likes: 1,013
|
Post by Godanubis on Mar 19, 2018 23:26:11 GMT
Correct, for a 40% tax payer, the inherited tax liability is c. 0.1% discount per 7.5 days age of the loan part, so at 80 days, a 1% discount more or less covers the inherited tax liability thnx for confirming that mrclondon If it was a 2% discount only and not premium it would prevent transfer to FISA as you would need to be like the Fash to buy in before someone snapped it up. You would also need to have the cash in your FISA and it would have to be substantial amount to make a transfer viable. Loosing £200+  in a second because your kids were playing Warcraft and slowed your internet connection down would make you cry.
|
|
spyrogyra
Member of DD Central
Posts: 386
Likes: 148
|
Post by spyrogyra on Mar 20, 2018 13:31:32 GMT
Ablrate discount/premium model works fine. I have been assured it meets the requirements for buying and selling at market price. And that's how sales can be executed on ABL - at the best market price. With their model, if someone wants to move an investment in/out of IFISA, they need to pay good attention to the market. There must be other creative options that would allow greater flexibility, more lively market and that still would not be contriving the rules.
|
|
aj
Member of DD Central
Posts: 348
Likes: 465
|
Post by aj on Apr 5, 2018 7:14:14 GMT
-1%er Loans on the SM are back under 50, and its not even the new tax year yet! I think next week will be a good time for selling any iffy investments you have!  |
|
Liz
Member of DD Central
Posts: 2,426
Likes: 1,297
|
Post by Liz on Apr 5, 2018 10:03:04 GMT
-1%er Loans on the SM are back under 50, and its not even the new tax year yet! I think next week will be a good time for selling any iffy investments you have! Wrong platform 😎
|
|
in a second because your kids were playing Warcraft and slowed your internet connection down would make you cry.
