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Post by GSV3MIaC on Apr 6, 2018 15:21:00 GMT
The only issue with the MT 'lets call them all defaulted' approach is that it pushes a bunch of taxable income into the future, leaving one hoping there will be a similar set of defaults (maybe Ly will fess up to some?) in 2018/9, to absorb the bump .. if not the carefully profiled (to stay out of supertax) income stream is going to veer in and out of acceptable.
I note that you can carry unused losses forward 4 years, IIRC (but sadly can't offset them against non P2P income sources), but you can't carry future gains backwards to use 2017/8 allowances.
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archie
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Post by archie on Apr 6, 2018 15:27:20 GMT
The only issue with the MT 'lets call them all defaulted' approach is that it pushes a bunch of taxable income into the future, leaving one hoping there will be a similar set of defaults (maybe Ly will fess up to some?) in 2018/9, to absorb the bump .. if not the carefully profiled (to stay out of supertax) income stream is going to veer in and out of acceptable. I note that you can carry unused losses forward 4 years, IIRC (but sadly can't offset them against non P2P income sources), but you can't carry future gains backwards to use 2017/8 allowances. You don't have to offset them. If you think a default might be recovered it may be better not to.
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Post by eascogo on Apr 6, 2018 18:15:09 GMT
The only issue with the MT 'lets call them all defaulted' approach is that it pushes a bunch of taxable income into the future, leaving one hoping there will be a similar set of defaults (maybe Ly will fess up to some?) in 2018/9, to absorb the bump .. if not the carefully profiled (to stay out of supertax) income stream is going to veer in and out of acceptable. I note that you can carry unused losses forward 4 years, IIRC (but sadly can't offset them against non P2P income sources), but you can't carry future gains backwards to use 2017/8 allowances. My bold. If this is correct I might be able to offset [absorb] much of this year's losses over the next four years. This assumes an improved lending strategy that doesn't lead to further losses in subsequent years. Do I live in hope?
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Post by GSV3MIaC on Apr 6, 2018 18:54:55 GMT
The only issue with the MT 'lets call them all defaulted' approach is that it pushes a bunch of taxable income into the future, leaving one hoping there will be a similar set of defaults (maybe Ly will fess up to some?) in 2018/9, to absorb the bump .. if not the carefully profiled (to stay out of supertax) income stream is going to veer in and out of acceptable. I note that you can carry unused losses forward 4 years, IIRC (but sadly can't offset them against non P2P income sources), but you can't carry future gains backwards to use 2017/8 allowances. You don't have to offset them. If you think a default might be recovered it may be better not to. Yes, but then you might wind up explaining (now, or worst case in some years time) why the numbers you send HMRC don't match the number the platform sent. Easiest to just go with the flow ..
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Post by df on Apr 6, 2018 19:31:24 GMT
Interest £250 Defaults £1600 22% of investments defaulted mostly Bollington Gutted My defaults are only slightly above interest. It would've been the other way round if I was more careful ![:-[](//storage.proboards.com/forum/images/smiley/embarrassed.png) I'm not too worried about defaults as they are recoverable, none of them look like a crystallised loss.
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jj
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Jolly Jammy
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Post by jj on Apr 6, 2018 20:05:42 GMT
Interest £432 Defaults £100 (yes it's a total loss Birkenhead - TRANCHE B) Average 7.5% net return (total default write off + tax free)
After my first default I started question MT's judgement on the difference between a good loan & a bad loan. By the time they were voted P2P of the year I didn't have any money left. So I've only invested less than 6 months of the year. A decision that saved me alot of money. Ironically I though COL did have better judgement on loan choice and look what happened there !
(P.S. and I'm not coming back any time soon.)
(I just thought I would add that a company can only write off a debtor if the debt is stopped being pursed. I would have through the same principle would apply here in P2P land.)
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keystone
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Post by keystone on Apr 6, 2018 21:09:12 GMT
This already looks like it's going to be a nightmare to keep track of but if you claim the relief for defaults does it have to be across all P2P platform defaults or can you pick which platforms you are claiming defaults for and which one you are not? For example can I clam for Zopa defaults and not claim the MT defaults?
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hazellend
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Post by hazellend on Apr 6, 2018 21:57:17 GMT
I think you only have to declare your total savings income and not detail defaults etc.
I have no idea how HMRC actually check you are accurate, but too scared to try to evade tax
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Post by mrclondon on Apr 6, 2018 22:16:10 GMT
This already looks like it's going to be a nightmare to keep track of but if you claim the relief for defaults does it have to be across all P2P platform defaults or can you pick which platforms you are claiming defaults for and which one you are not? For example can I clam for Zopa defaults and not claim the MT defaults? Yep, you are right about it being a record keeping nightmare. I've now got records for 2015-16 bad debt updated with 2016-17 and 2017-18 recoveries, 2016-17 bad debt updated with 2017-18 recoveries and 2017-18 bad debt (across the 8 or so platforms I'm involved with). With screen grabs to support the outstanding loan value at the end of each financial year. But now my record keeping is going to have to take into account that I won't be claiming loss relief on all the 2017-18 bad debt, but will be able to claim loss relief in a few years time when any residual balance is written off on the loans I'm not claiming loss relef now. I'll delay filing the tax return until the end of the year so I'm in no rush to decide which loans to claim relief for and which not based on recoveries during 2018 - i.e. in general I'll be making the decision on a per loan basis not a per platform basis. I have no idea how on earth HMRC can be expected to make sense of p2p data being provided to them by the platforms. My approach to the tax form is simply to provide the single figure of (interest received + recoveries during year - bad debt I wish to claim). I suspect anyone that HMRC knows is in receipt of p2p income is given a fair degree of latitude when comparing self assesment figures with those from the platforms. That said, 2017-18 tax forms might come under greater scrutiny with most lenders able to claim loss relief wiping out the interest entirely. Background: apart from a few thousand of consultancy income each year, for now my only taxable income is from p2p, and with total allowable p2p loss relief greater than p2p interest for 2017-18 I owe no tax for 2017-18. The complexity in my case is its pointless claiming loss relief for interest that is already covered by the personal allowance and zero rated savings tax bands. And VERY frustratingly I have a EIS investment that issued share certificates dated 5th Apr 18, and I've already wiped outt the whole of the 2016-17 tax bill with the EIS claim for the AC shares.
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Post by elephantrosie on Apr 6, 2018 23:59:54 GMT
i dont think we should count 100% defaults as irrecoverable.
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Liz
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Post by Liz on Apr 7, 2018 1:08:11 GMT
i dont think we should count 100% defaults as irrecoverable. Agreed, you have to make a case by case judgement call. Or for ease set a figure across all defaults, say 50% I like to be pessimistic, often 100%, then am surprised and happy when I receive more back than I expected. Writing money off also takes away the worry and stress as recoveries drag on for years.
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Post by elephantrosie on Apr 7, 2018 2:59:32 GMT
Setting 0% coverable default rate is a good psychological way. Everyone deals with finance differently.
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hazellend
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Post by hazellend on Apr 7, 2018 6:41:14 GMT
Setting 0% coverable default rate is a good psychological way. Everyone deals with finance differently. It is purely for tax accounting reasons I am putting all the defaults in. I’d rather put the same info into my return as the platform sends to HMRC for simplicity sake. Mrclondons example is a good reason not to do this though
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archie
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Post by archie on Apr 7, 2018 6:41:27 GMT
You don't have to offset them. If you think a default might be recovered it may be better not to. Yes, but then you might wind up explaining (now, or worst case in some years time) why the numbers you send HMRC don't match the number the platform sent. Easiest to just go with the flow .. That's why we need an easier way to list the items included in the defaults and recoveries section of the tax statement. I certainly won't be offsetting all my defaults as it would cost me too much next year. There really isn't any way HMRC could reconcile the income figure you put on your tax statement with any certainty. Just keep records so you can prove your calculations.
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agent69
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Post by agent69 on Apr 7, 2018 8:15:16 GMT
After my first default I started question MT's judgement on the difference between a good loan & a bad loan. By the time they were voted P2P of the year .... A year ago MT and COL were the darlings of the P2P universe. How the mighty fallen. From a personal perspective, I am moving onto part time working, so no issues with claiming defaults now and then including recoveries within next years tax returns
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