zlb
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Post by zlb on Apr 20, 2018 20:14:13 GMT
I wonder whether BM benefits from the current arrangement where investors pay tax on the fees. Presumably they don't pay tax on the fees as investors are paying it. Presuming that the same block of money can't be taxed twice.
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Post by df on Apr 20, 2018 20:55:32 GMT
I left BM for the same reason, but later reconsidered how I'm distributing my p2p funds and invested again. Had no loss with BM first time round and it's going fine now. I don't understand why people so resistant to fees. Is it because the word sounds bad? Every platform pays us less than they get from borrowers, they have to sustain and make some profit. I'm not interested how the fee is packaged, but what return I get from my investment. With BM it's just the irritation of getting taxed on money you theoretically had but never actually had (fees), when other platforms have found a way of getting around this, particularly if you pay 40% tax on it. I don't object to fees in general, my bigger beef with BM is the inability to diversify as much as I would like. The same for me, I'd prefer 0.5% or lower, but 1% is much better than you can achieve on many other platforms.
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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 Apr 20, 2018 21:03:40 GMT
ashtondav "risk free 5 year on RS" hmm. A bank or savings account it is not🤔 BS, not RS. BM delivers, if on target, for a 40% tax payer, 3.3% post tax. I’ll stick a few grand in when there’s an isa but BM is a seriously flawed model for a taxpayer. To be honest, it’s a non starter. On current trends by year end BS 5 year rates will be c. 3%. BM busted flush apart from tax dodgers... Sorry. Must go to opticians.
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Post by stevefindlay on Apr 23, 2018 13:12:50 GMT
ashtondav "risk free 5 year on RS" hmm. A bank or savings account it is not🤔 BS, not RS. BM delivers, if on target, for a 40% tax payer, 3.3% post tax. I’ll stick a few grand in when there’s an isa but BM is a seriously flawed model for a taxpayer. To be honest, it’s a non starter. On current trends by year end BS 5 year rates will be c. 3%. BM busted flush apart from tax dodgers... "[BM is] a non-starter....Busted flush apart from tax dodgers" Let's explore this a little: (1) You can earn interest income of £500 or £1,000 p.a. without paying tax. Assuming a 6.5% net return that's a balance of £7,700 or £15,400 at the beginning of the year. Or £15,400 and £30,800 if you split across a spouse. Those are quite healthy balances, without needing to consider any tax planning Using the average actual 2017 return of 8.5% p.a. across BondMason: (2) If you are a basic rate tax payer, and have already used your interest income tax allowance elsewhere, then the effective post-tax return of BM would be 5.3% - 5.8% (3) If you are a higher rate tax payer, then the post-tax rates of return would be 3.6%-4.1% I think these compare very favourably to the post-tax return available from all sensible P2P Lending companies, particularly on a risk-adjusted basis when you consider the diversified nature of a BM account, the better quality of loans available through BM, etc. (4) In addition, you can use tax planning methods such as your SIPP, SSAS and through a company to reduce your tax payable from your income on investing through BondMason. Again, for comparison, most P2P lending companies aren't available through a SIPP / SSAS administrator; as their investment structures don't comply. Your analysis ashtondav oversimplifies the analysis. But I guess that's standard protocol when sniping in the P2P forum.
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keystone
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Post by keystone on Apr 23, 2018 14:11:08 GMT
BS, not RS. BM delivers, if on target, for a 40% tax payer, 3.3% post tax. I’ll stick a few grand in when there’s an isa but BM is a seriously flawed model for a taxpayer. To be honest, it’s a non starter. On current trends by year end BS 5 year rates will be c. 3%. BM busted flush apart from tax dodgers... "[BM is] a non-starter....Busted flush apart from tax dodgers" Let's explore this a little: (1) You can earn interest income of £500 or £1,000 p.a. without paying tax. Assuming a 6.5% net return that's a balance of £7,700 or £15,400 at the beginning of the year. Or £15,400 and £30,800 if you split across a spouse. Those are quite healthy balances, without needing to consider any tax planning
Using the average actual 2017 return of 8.5% p.a. across BondMason: (2) If you are a basic rate tax payer, and have already used your interest income tax allowance elsewhere, then the effective post-tax return of BM would be 5.3% - 5.8% (3) If you are a higher rate tax payer, then the post-tax rates of return would be 3.6%-4.1% I think these compare very favourably to the post-tax return available from all sensible P2P Lending companies, particularly on a risk-adjusted basis when you consider the diversified nature of a BM account, the better quality of loans available through BM, etc. (4) In addition, you can use tax planning methods such as your SIPP, SSAS and through a company to reduce your tax payable from your income on investing through BondMason. Again, for comparison, most P2P lending companies aren't available through a SIPP / SSAS administrator; as their investment structures don't comply. Your analysis ashtondav oversimplifies the analysis. But I guess that's standard protocol when sniping in the P2P forum. I don't think that is correct. As Bond mason states in its own end of year tax statement, the interest earned and reported to HMRC is the gross amount before deduction of Bondmason's fees. Assuming a 6.5% net return then clients would face an unnecessary tax liability of £46.40 for higher rate taxpayers on balances of £7,700, a direct result of your fees. Your fees in effect reduce the non taxable amount available for your clients. You still haven't addressed why you can't structure your business proposition so that client's do not face a tax liability on the gross amount? As for setting up a company to reduce tax liability, isn't it correct that you either have to have something else as your main business activity or you need to be registered as a investment company with all that entails.
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Post by stevefindlay on Apr 23, 2018 14:14:01 GMT
"[BM is] a non-starter....Busted flush apart from tax dodgers" Let's explore this a little: (1) You can earn interest income of £500 or £1,000 p.a. without paying tax. Assuming a 6.5% net return that's a balance of £7,700 or £15,400 at the beginning of the year. Or £15,400 and £30,800 if you split across a spouse. Those are quite healthy balances, without needing to consider any tax planning
Using the average actual 2017 return of 8.5% p.a. across BondMason: (2) If you are a basic rate tax payer, and have already used your interest income tax allowance elsewhere, then the effective post-tax return of BM would be 5.3% - 5.8% (3) If you are a higher rate tax payer, then the post-tax rates of return would be 3.6%-4.1% I think these compare very favourably to the post-tax return available from all sensible P2P Lending companies, particularly on a risk-adjusted basis when you consider the diversified nature of a BM account, the better quality of loans available through BM, etc. (4) In addition, you can use tax planning methods such as your SIPP, SSAS and through a company to reduce your tax payable from your income on investing through BondMason. Again, for comparison, most P2P lending companies aren't available through a SIPP / SSAS administrator; as their investment structures don't comply. Your analysis ashtondav oversimplifies the analysis. But I guess that's standard protocol when sniping in the P2P forum. I don't think that is correct. As Bond mason states in its own end of year tax statement, the interest earned and reported to HMRC is the gross amount before deduction of Bondmason's fees. Assuming a 6.5% net return then clients would face an unnecessary tax liability of £46.40 for higher rate taxpayers on balances of £7,700, a direct result of your fees. Your fees in effect reduce the non taxable amount available for your clients. You still haven't addressed why you can't structure your business proposition so that client's do not face a tax liability on the gross amount? As for setting up a company to reduce tax liability, isn't it correct that you either have to have something else as your main business activity or you need to be registered as a investment company with all that entails. Please see: www.gov.uk/apply-tax-free-interest-on-savings£500 or £1,000 tax free interest income (depending on your tax situation).
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keystone
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Post by keystone on Apr 23, 2018 14:37:49 GMT
Taxable Income Statement for 06/04/2017 - 05/04/2018
A. Interest Paid During the Period*: £616
* Interest paid does not include interest accrued but not paid during the period.
B. Less Investment Write-off : £0
C. Interest Net of Write-off: £616
D. Less Fees During Period: £115.50
E. Interest Net of Write-off and Fees Paid During the Period: £500.50
Notes & Disclaimer
We have shown your net figures on a cash basis rather than an accruals basis. This means that accrued interest but not yet paid as at April 6 is not included in your Net Cash Return figure above. So this figure is lower than you may recognise from your dashboard. Advice from HMRC suggests that you are able to offset losses (write-offs), but not administration fees in your tax return. So the reportable income gain to report is likely to be "C" above.
If you have invested through a Limited company, then you may want to report accrued interest and / or be able to offset costs including the BondMason administration fees which would be "E" above. Please contact us if you would like further data.
We are happy to discuss your tax situation in the interests of trying to be helpful, but we cannot provide guidance or advice. Please ask if you have any questions.
Please note: this communication does not constitute any advice, and BondMason Ltd will not be held liable for errors, omissions or otherwise. Please contact your tax adviser if you are unsure how to report these returns on your tax return.
A worked example.
A higher rate tax payer. £500 tax free allowance available. Gross return 8%. BM fees 1.5% p.a. on investment amounts up to £25,000
. 6.5% Net return.
Assumed balance at start or year and throughout year for simplicity £7,700, BM charge on the daily balance so fees would be higher as interest is earned.
As stated on your own tax statement re-portable income is "C" £616 not "E" £500.50. 40% tax due on £116. Therefore tax liability is £46.40 on £7700 not zero as you indicated.
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Post by stevefindlay on Apr 23, 2018 15:47:07 GMT
Taxable Income Statement for 06/04/2017 - 05/04/2018 A. Interest Paid During the Period*: £616 * Interest paid does not include interest accrued but not paid during the period. B. Less Investment Write-off : £0 C. Interest Net of Write-off: £616 D. Less Fees During Period: £115.50 E. Interest Net of Write-off and Fees Paid During the Period: £500.50 Notes & Disclaimer We have shown your net figures on a cash basis rather than an accruals basis. This means that accrued interest but not yet paid as at April 6 is not included in your Net Cash Return figure above. So this figure is lower than you may recognise from your dashboard. Advice from HMRC suggests that you are able to offset losses (write-offs), but not administration fees in your tax return. So the reportable income gain to report is likely to be "C" above.
If you have invested through a Limited company, then you may want to report accrued interest and / or be able to offset costs including the BondMason administration fees which would be "E" above. Please contact us if you would like further data. We are happy to discuss your tax situation in the interests of trying to be helpful, but we cannot provide guidance or advice. Please ask if you have any questions. Please note: this communication does not constitute any advice, and BondMason Ltd will not be held liable for errors, omissions or otherwise. Please contact your tax adviser if you are unsure how to report these returns on your tax return. A worked example. A higher rate tax payer. £500 tax free allowance available. Gross return 8%. BM fees 1.5% p.a. on investment amounts up to £25,000 . 6.5% Net return. Assumed balance at start or year and throughout year for simplicity £7,700, BM charge on the daily balance so fees would be higher as interest is earned. As stated on your own tax statement re-portable income is "C" £616 not "E" £500.50. 40% tax due on £116. Therefore tax liability is £46.40 on £7700 not zero as you indicated. Correct. For higher rate tax payers with £500 of interest allowance, it should be £6,250 in this case rather than £7,700. And if you are a Basic Rate tax payer, you wouldn't have to pay any tax as your earned interest is less than £1,000. So the figure is £12,500. And then double both of these totals if sharing an allowance with a spouse.
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Greenwood2
Member of DD Central
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Post by Greenwood2 on Apr 23, 2018 20:07:43 GMT
Taxable Income Statement for 06/04/2017 - 05/04/2018 A. Interest Paid During the Period*: £616 * Interest paid does not include interest accrued but not paid during the period. B. Less Investment Write-off : £0 C. Interest Net of Write-off: £616 D. Less Fees During Period: £115.50 E. Interest Net of Write-off and Fees Paid During the Period: £500.50 Notes & Disclaimer We have shown your net figures on a cash basis rather than an accruals basis. This means that accrued interest but not yet paid as at April 6 is not included in your Net Cash Return figure above. So this figure is lower than you may recognise from your dashboard. Advice from HMRC suggests that you are able to offset losses (write-offs), but not administration fees in your tax return. So the reportable income gain to report is likely to be "C" above.
If you have invested through a Limited company, then you may want to report accrued interest and / or be able to offset costs including the BondMason administration fees which would be "E" above. Please contact us if you would like further data. We are happy to discuss your tax situation in the interests of trying to be helpful, but we cannot provide guidance or advice. Please ask if you have any questions. Please note: this communication does not constitute any advice, and BondMason Ltd will not be held liable for errors, omissions or otherwise. Please contact your tax adviser if you are unsure how to report these returns on your tax return. A worked example. A higher rate tax payer. £500 tax free allowance available. Gross return 8%. BM fees 1.5% p.a. on investment amounts up to £25,000 . 6.5% Net return. Assumed balance at start or year and throughout year for simplicity £7,700, BM charge on the daily balance so fees would be higher as interest is earned. As stated on your own tax statement re-portable income is "C" £616 not "E" £500.50. 40% tax due on £116. Therefore tax liability is £46.40 on £7700 not zero as you indicated. Correct. For higher rate tax payers with £500 of interest allowance, it should be £6,250 in this case rather than £7,700. And if you are a Basic Rate tax payer, you wouldn't have to pay any tax as your earned interest is less than £1,000. So the figure is £12,500. And then double both of these totals if sharing an allowance with a spouse. Assuming BM is your 1st (only) source of interest. If you have already used up your tax allowance the tax is fully applied.
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TheDriver
Member of DD Central
Slightly bonkers
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Post by TheDriver on Apr 25, 2018 8:42:43 GMT
Taxable Income Statement for 06/04/2017 - 05/04/2018 A. Interest Paid During the Period*: £616 * Interest paid does not include interest accrued but not paid during the period. B. Less Investment Write-off : £0 C. Interest Net of Write-off: £616 D. Less Fees During Period: £115.50 E. Interest Net of Write-off and Fees Paid During the Period: £500.50 Notes & Disclaimer We have shown your net figures on a cash basis rather than an accruals basis. This means that accrued interest but not yet paid as at April 6 is not included in your Net Cash Return figure above. So this figure is lower than you may recognise from your dashboard. Advice from HMRC suggests that you are able to offset losses (write-offs), but not administration fees in your tax return. So the reportable income gain to report is likely to be "C" above.
If you have invested through a Limited company, then you may want to report accrued interest and / or be able to offset costs including the BondMason administration fees which would be "E" above. Please contact us if you would like further data. We are happy to discuss your tax situation in the interests of trying to be helpful, but we cannot provide guidance or advice. Please ask if you have any questions. Please note: this communication does not constitute any advice, and BondMason Ltd will not be held liable for errors, omissions or otherwise. Please contact your tax adviser if you are unsure how to report these returns on your tax return. A worked example. A higher rate tax payer. £500 tax free allowance available. Gross return 8%. BM fees 1.5% p.a. on investment amounts up to £25,000 . 6.5% Net return. Assumed balance at start or year and throughout year for simplicity £7,700, BM charge on the daily balance so fees would be higher as interest is earned. As stated on your own tax statement re-portable income is "C" £616 not "E" £500.50. 40% tax due on £116. Therefore tax liability is £46.40 on £7700 not zero as you indicated. Correct. For higher rate tax payers with £500 of interest allowance, it should be £6,250 in this case rather than £7,700. And if you are a Basic Rate tax payer, you wouldn't have to pay any tax as your earned interest is less than £1,000. So the figure is £12,500. And then double both of these totals if sharing an allowance with a spouse.
I don't think Savings interest relief is transferable? As I understand - and implement - it, spouses need the accounts to be in their own name for entitlement to the relief. I believe the only common tax which can be shared in that way ( by transfer) is 10% of personal income allowance from a low-earning spouse.
However, of more use would be the "Starting Rate for Savings" relief, which is up to £5k if earning under £16850.
HtH
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pom
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Post by pom on Apr 26, 2018 10:05:18 GMT
Had half an eye on this thread for a while.....Way I see it for anyone that's employed and so only has the 500/1000 to play with AND is using BM as part of a diversified portfolio (less said about anyone that only has their eggs in a BM basket the better I think) then given the size of the minimum investment they'll undoubtedly already have multiple calls on that allowance already, so talking about it as a mitigation for the tax on fees isn't really helpful.
At the same time tho BM have to make a living, but unlike other platforms are unable to charge borrowers. So whilst it's important to understand that the tax treatment here is different (and other platforms have their tax quirks too) it's not BM's fault we have to pay the tax on them, they can't rewrite the tax laws. And it's exactly the same with S&S fees.
It is what it is - we have plenty of choices for diversification, and all the platforms have their pros & cons - there will never be a "perfect" platform that has everything we want (and if you think you've found one, be very careful!).
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zlb
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Post by zlb on Apr 26, 2018 19:11:19 GMT
Had half an eye on this thread for a while.....Way I see it for anyone that's employed and so only has the 500/1000 to play with AND is using BM as part of a diversified portfolio (less said about anyone that only has their eggs in a BM basket the better I think) then given the size of the minimum investment they'll undoubtedly already have multiple calls on that allowance already, so talking about it as a mitigation for the tax on fees isn't really helpful. At the same time tho BM have to make a living, but unlike other platforms are unable to charge borrowers. So whilst it's important to understand that the tax treatment here is different (and other platforms have their tax quirks too) it's not BM's fault we have to pay the tax on them, they can't rewrite the tax laws. And it's exactly the same with S&S fees. It is what it is - we have plenty of choices for diversification, and all the platforms have their pros & cons - there will never be a "perfect" platform that has everything we want (and if you think you've found one, be very careful!). Can BM pay tax on their income rather than me though? Their fee is their income, isn't it? Unless I've misunderstood.
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nairda
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Post by nairda on Apr 26, 2018 21:31:53 GMT
Can BM pay tax on their income rather than me though? Their fee is their income, isn't it? Unless I've misunderstood. While I accept BM's statement that we cannot deduct fees and hence tax, it does seem to me that we, the investors pay tax on money we don't get and BM end up paying tax again on the same money. In other words double taxation.
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pom
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Post by pom on Apr 26, 2018 21:41:37 GMT
No different to fees on S&S or bank accounts and undoubtedly lots of other things. It is what it is, and neither we nor BM can change it.
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TheDriver
Member of DD Central
Slightly bonkers
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Post by TheDriver on Apr 26, 2018 22:35:13 GMT
Although I think the marginal difference of the tax on fees is relatively insignificant, my perception of recent discussion was BM's rose-tinted view of tax mitigation; I will certainly heed Steve's warning that BM's interpretation cannot be construed as tax advice or guidance! Happy to sort it out myself, and leave them to concentrate on sourcing good investments.
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