SteveT
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Post by SteveT on May 29, 2018 14:57:07 GMT
You declare net income in the year of £159.94 (£2,180.12 interest less capital losses from defaulted loans in the year of £2,345.18, plus capital recovered from defaulted loans in the year of £325.00)
Future recoveries against those newly defaulted loans will be taxable in the tax years they arise.
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Post by munchydave on May 29, 2018 14:59:27 GMT
Hi all On my Funding Secure tax statement it says: Total interest earned £2,180.12 Total tax withheld £0.00 Capital losses from defaulted loans £2,345.18 Capital recovered from defaulted loans £325.00 What do I put down as a loss on my personal tax return? Im trying to establish what loans are deemed "unrecoverable" as I need to include that figure as losses on my tax return. What figure does Funding Secure deem unrecoverable? I presume not the 'defaulted loans' amount as this could in the future be 'recovered'? Thanks Add the recoveries £325 to the interest earned to get total income. Subtract the defaults £2345.18 to get gross profit. I make it about £150. Was it worth the effort you would get more with a NS&I bond with full security.
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trevor
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Post by trevor on May 29, 2018 14:59:31 GMT
View HMRC doc SAIM 12000 on the HMRC.gov.uk website. It's a thorough doc which explains all and there is a worked example SAIM 12220. You will need to set a side at least half an hour to digest and understand.
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Greenwood2
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Post by Greenwood2 on May 29, 2018 17:04:57 GMT
Hi all On my Funding Secure tax statement it says: Total interest earned £2,180.12 Total tax withheld £0.00 Capital losses from defaulted loans £2,345.18 Capital recovered from defaulted loans £325.00 What do I put down as a loss on my personal tax return? Im trying to establish what loans are deemed "unrecoverable" as I need to include that figure as losses on my tax return. What figure does Funding Secure deem unrecoverable? I presume not the 'defaulted loans' amount as this could in the future be 'recovered'? Thanks Add the recoveries £325 to the interest earned to get total income. Subtract the defaults £2345.18 to get gross profit. I make it about £150. Was it worth the effort you would get more with a NS&I bond with full security. That's terrible, is it typical for FS? I haven't used them recently.
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Post by munchydave on May 29, 2018 17:10:49 GMT
Add the recoveries £325 to the interest earned to get total income. Subtract the defaults £2345.18 to get gross profit. I make it about £150. Was it worth the effort you would get more with a NS&I bond with full security. That's terrible, is it typical for FS? I haven't used them recently. That's why I am out as soon as possible.
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copacetic
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Post by copacetic on May 29, 2018 19:41:11 GMT
That's terrible, is it typical for FS? I haven't used them recently. FS has on their tax statement "capital losses from defaulted loans" but really they should have "loans deemed irrecoverable for tax purposes." Most first charge loans will still recover some capital some time in the (possibly distant) future. Unfortunately there are a few particularly bad loans, mostly second or higher charges, where total loss is likely. One thing you should consider @dllive before claiming loss relief on your interest is how likely you think the loans are to recover and if they do will the recovery (which counts as income effectively) push you into a higher tax bracket next year. It might be advantageous to pay the tax this year rather than pay the higher rate next year.
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ilmoro
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'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on May 30, 2018 17:58:17 GMT
Thanks all. I hadnt realised how bad my loans with Finding Secure were performing!!! (Ive had to focus on other things). Thats ridiculous!! Unless a lot of the capital recovered from defaulted loans goes up next year (or year after!?) then thats an awful return!! Ive just logged in and unset the auto renewal option on all my loans and am selling as many as the system is allowing me to do. I want as little exposure on FS as possible from now on. I suppose Ill have to keep my FS account open so that in the future - if theyre able to recover capital from the defaulted loans - they can credit my account. Again, my bad for taking my eye off the ball, but bitterly disappointed with FS's performance! I contacted Lendy and AssetzCapital to ask what losses from their platforms I need to declare on my tax return, and theyve both said they have had no capital losses to date. Is that the case? And yes, Im one of the unlucky ones that had a lot of loans on Collateral!!! 17/18 has been financially dreadful for me!  AC have had no crystalised losses ie where a loan has no prospect of further recovery & has been written off but they have declared losses for the purpose of HMRC loss relief and these show on your tax statement if you hold eligible loans Lendy dont admit any losses in any form as they are still pursuing recoveries. However, under HMRC loss relief rules lenders can 'treat' a loan as eligible for loss relief if it meets the criteria set out by the HMRC (see the guidance on SAIM12000). This post contains information that lenders could choose to use for that purpose p2pindependentforum.com/post/268187/thread
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SteveT
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Post by SteveT on May 31, 2018 6:33:55 GMT
Thanks. So which figure on my AC statement shows losses I can declare? Is it "Loans put into recoveries in the period 1st April 2017 to 1st April 2018" ? I dont think it is, but cant see another figure that shows losses. Yes. You don’t actually declare “losses” separately in your tax return, you instead declare your net P2P income (interest earned, minus loans deemed irrecoverable (under SAIM 12000), plus recoveries from loans previously deemed irrecoverable)
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Greenwood2
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Post by Greenwood2 on May 31, 2018 6:47:47 GMT
Thanks. So which figure on my AC statement shows losses I can declare? Is it "Loans put into recoveries in the period 1st April 2017 to 1st April 2018" ? I dont think it is, but cant see another figure that shows losses. Yes. You don’t actually declare “losses” separately in your tax return, you instead declare your net P2P income (interest earned, minus loans deemed irrecoverable (under SAIM 12000), plus recoveries from loans previously deemed irrecoverable) And say what you have done in the comments, so HMRC are aware, particularly if the platform are not giving figures for irrecoverable loans (or you are using different values).
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SteveT
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Post by SteveT on May 31, 2018 7:16:16 GMT
Thanks. So which figure on my AC tax statement do I use as "loans deemed irrecoverable"? "Loans put into recoveries in the period 1st April 2017 to 1st April 2018" Unlike some other platforms, AC then divide "recoveries from loans previously deemed irrecoverable" into 2 separate figures; recovered capital (or "principal") and recovered interest. Somewhat confusingly, they then label the net figure (ie. what you declare as net P2P income) as "Total declarable interest income", even though recovered capital isn't really interest.
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SteveT
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Post by SteveT on May 31, 2018 7:59:18 GMT
Agh! Why do they make it so confusing!? This probably means that Ive been declaring too much interest Ive been earning for the past 2 years!! Or does it? Possibly, it depends what figures you've used in the past. But if you haven't previously claimed loans to be irrecoverable then you don't need to pay tax on recovered capital. It only affects which year you end up paying the tax in.
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SteveT
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Post by SteveT on May 31, 2018 13:56:15 GMT
Sorry - youre going to have to spell this out for me: So if I have declared losses on AC in the past (which I think I did last year but I dont have my paperwork in front of me) then Ill pay tax on the recovered capital this year?Yes
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ilmoro
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'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on May 31, 2018 14:02:02 GMT
Sorry - youre going to have to spell this out for me: So if I have declared losses on AC in the past (which I think I did last year but I dont have my paperwork in front of me) then Ill pay tax on the recovered capital this year? Im not bothered about what year I pay tax in or deduct losses etc.. as my income each year is always higher rate. As long as Im entering the correct figures (interest earnt and losses incurred) on my tax returns then that should be fine. Basically - I dont want to be telling HMRC that Im earning more interest than I actually am becuase Ill be taxed unfairly on it! Yes. If you declare a loss one year and the loan recovers in full or part the following year then you will need to declare the recovered part and will be taxed on it accordingly
So say in 2016-17 loan A was declared as in recovery by AC & you suffered a loss of your holding of £100, you earnt £120 interest on AC so your net income was £20 which you declare under Other Income. (assume AC is your only platform) In 2017 -18 loan A recovered 50% of the capital so you gained a recovery of £50 and you earned £110 of interest so you declare net income of £160 under Other Income
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trium
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Post by trium on May 31, 2018 17:04:32 GMT
Just thought I'd mention - as I understand it when you sell loans on the secondary market you receive a payment from the buyer equivalent to the accrued interest to the date of the transaction but you are not required to account for tax on that amount as the liability rests with whoever owns the loan when it is repaid. If you have sold a lot of loans on the SM the accrued interest will not be included in your annual total of interest earned so your performance might not be as bad as in looks at first glance.
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nick
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Post by nick on May 31, 2018 23:11:01 GMT
That's terrible, is it typical for FS? I haven't used them recently. FS has on their tax statement "capital losses from defaulted loans" but really they should have "loans deemed irrecoverable for tax purposes." Most first charge loans will still recover some capital some time in the (possibly distant) future. Unfortunately there are a few particularly bad loans, mostly second or higher charges, where total loss is likely. One thing you should consider @dllive before claiming loss relief on your interest is how likely you think the loans are to recover and if they do will the recovery (which counts as income effectively) push you into a higher tax bracket next year. It might be advantageous to pay the tax this year rather than pay the higher rate next year. I would be weary of being selective in the timing of loss relief claims, particularly when a platform gives figures. Whether a loan is deemed irrecoverable under the legislation is a matter of fact rather than judgement (although the platforms do not always feed all the relevant facts to lenders which makes the determination of when a loan becomes 'irrecoverable' difficult absent a platform providing a specific figure).
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