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Post by whatever on Aug 19, 2014 14:59:24 GMT
Ive been investing in Zopa for a few years but now Im a 40% taxpayer it doesn't look worthwhile because Zopa charge a 1% fee and the bad debt provision is not tax deductible , meaning you pay 40% on the gross amount not on the net amount. The effect being your paltry 3% or whatever after costs is almost wiped out. (3%+2% bad debt + 1% fee = 6%, taxed at 40% = 4 , leaving you with -1)
Ratesetter on the other hand looks a better deal as theres no lender fee from what I can see. It also has a provision fund for bad debts . What I don't understand though is how the tax man views this - if the provision fund is called upon do we get taxed on that or what? Anyone got any experience of this?
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pikestaff
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Post by pikestaff on Aug 19, 2014 16:28:05 GMT
I'm not in Zopa but I thought that it also now operated a provision fund (for new lending anyway).
As far as RS is concerned, we are just taxed on the interest we receive. It can't work any other way, because we don't know what's "under the hood" of the provision fund. If there were losses not covered by the provision fund, they would be non-deductible but hopefully that will not happen.
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mikeb
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Post by mikeb on Aug 19, 2014 17:49:54 GMT
I'm not in Zopa but I thought that it also now operated a provision fund (for new lending anyway). It does, for new lending. The OP has been in "for a few years", so like me, probably has a decent backlog of loans that are not covered by Safeguard.
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spiral
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Post by spiral on Aug 20, 2014 10:06:09 GMT
if the provision fund is called upon do we get taxed on that or what? Anyone got any experience of this? There was a discussion earlier this year on the Zopa forum about this and if I recall, it is a grey area but it is assumed that HMRC wouldn't look unfavourably on it (as it would undermine the whole P2P concept where PFs are provided). The basics were along the lines of if a loan defaults and the PF repays you, is it repaying the debt or is it something else and is that something else taxable.
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Post by whatever on Aug 21, 2014 12:49:39 GMT
Thanks for the response guys. I guess though the clear advantage of RS over Zopa is that it doesn't charge a lender fee, so you don't have to pay tax on that. Ill be moving all my funds from Zopa to RS unless someone tells me Im wrong!
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Investor
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Post by Investor on Aug 21, 2014 12:56:39 GMT
Thanks for the response guys. I guess though the clear advantage of RS over Zopa is that it doesn't charge a lender fee, so you don't have to pay tax on that. Ill be moving all my funds from Zopa to RS unless someone tells me Im wrong! Think you might have a long wait before someone tells you that. General consensus of opinion on here shows a movement from Zopa to RS
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Post by GSV3MIaC on Aug 22, 2014 7:59:44 GMT
Yep. Zopa used to have a good forum (now hidden) and back in the early days a more fun lending system. The whole safeguard thing has been a big step back .. Especially the way they incrementally killed off the old system. They are now, IMO, Santander lite .. Better rate but, no fscs backstop. They do have a better early sellout option, which is probably working against them. Even their name is now a liability, if you look up where it came from.
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Investor
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Post by Investor on Aug 22, 2014 8:56:58 GMT
Yep. Zopa used to have a good forum (now hidden) and back in the early days a more fun lending system. The whole safeguard thing has been a big step back .. Especially the way they incrementally killed off the old system. They are now, IMO, Santander lite .. Better rate but, no fscs backstop. They do have a better early sellout option, which is probably working against them. Even their name is now a liability, if you look up where it came from. Not at all. Simply change it to Zone of Pre-set Agreement
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mikeb
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Post by mikeb on Aug 22, 2014 18:09:21 GMT
I don't know which is thinner :- that argument, or the zone that stretches from 5.2% to 5.2%  |
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