boundah
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Post by boundah on Nov 8, 2018 10:36:50 GMT
Sorry if I've missed this from another thread. Unlike my ABL & MT tax statements for FY2017-18, Lendy has no 'defaults' section. Is that because they consider no loans are irrecoverable, or because they expect us to use our own judgment?
I've read the HMRC guidance (SAIM 12000) and am fairly happy to make my own call, but would be interested in whether anyone has kept a list of which loans they consider irrecoverable.
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hazellend
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Post by hazellend on Nov 8, 2018 10:39:39 GMT
I would write off all defaulted loans against P2P income and add back any recoveries as they are repaid.
Just my personal preference as it keeps things tidy and this is what moneything do.
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ilmoro
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Post by ilmoro on Nov 8, 2018 11:55:39 GMT
Sorry if I've missed this from another thread. Unlike my ABL & MT tax statements for FY2017-18, Lendy has no 'defaults' section. Is that because they consider no loans are irrecoverable, or because they expect us to use our own judgment? I've read the HMRC guidance (SAIM 12000) and am fairly happy to make my own call, but would be interested in whether anyone has kept a list of which loans they consider irrecoverable. List here which I update randomly
Unlike most other platforms, Lendy dont accept the definition in SAIM12050 of loans 'treatable' as losses, based on the advice they have received, so consider no loans to have 'become' irrecoverable as legal procedures are continuing.
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p2p2p
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Post by p2p2p on Nov 8, 2018 15:30:31 GMT
Lendy have refused to provide a defaults calculation for tax purposes. I suggest you contact support to get that policy confirmed to you in writing, and then make your own assessment of which loans you think have defaulted.
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brianlom1
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Post by brianlom1 on Nov 8, 2018 20:33:07 GMT
Does anyone know the correct tax treatment for bad debt that occurs within a SIPP or IFISA? Can I offset losses in my SIPP or IFISA against profits in a standard P2P account?
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hazellend
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Post by hazellend on Nov 8, 2018 21:46:28 GMT
Does anyone know the correct tax treatment for bad debt that occurs within a SIPP or IFISA? Can I offset losses in my SIPP or IFISA against profits in a standard P2P account? No, which is why I don’t invest in P2P isa
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IFISAcava
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Post by IFISAcava on Nov 8, 2018 23:22:47 GMT
Does anyone know the correct tax treatment for bad debt that occurs within a SIPP or IFISA? Can I offset losses in my SIPP or IFISA against profits in a standard P2P account? No, which is why I don’t invest in P2P isa Conversely it's the reason I do invest in P2P ISAs. As a taxpayer, If you make a net overall profit (P2P interest minus P2P capital losses), your return will always be higher in the ISA. Only if you make a net overall loss is that not the case - and since I didn't go into P2P to make a net loss, I'm sticking with ISAs.
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IFISAcava
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Post by IFISAcava on Nov 8, 2018 23:29:27 GMT
No, which is why I don’t invest in P2P isa Conversely it's the reason I do invest in P2P ISAs. As a taxpayer, If you make a net overall profit (P2P interest minus P2P capital losses), your return will always be higher in the ISA. Only if you make a net overall loss is that not the case - and since I didn't go into P2P to make a net loss, I'm sticking with ISAs. Having said that, I accept there is also an opportunity cost, and that if you didn't use ISAs for P2P, you'd use them for something else. So the position isn't quite so black and white: if you had a really low P2P net profit, you might have been better off using the tax shelter for cash or share dividends. But since I didn't go into P2P to earn a lower yield than from cash or shares... (etc etc)
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hazellend
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Post by hazellend on Nov 8, 2018 23:31:08 GMT
No, which is why I don’t invest in P2P isa Conversely it's the reason I do invest in P2P ISAs. As a taxpayer, If you make a net overall profit (P2P interest minus P2P capital losses), your return will always be higher in the ISA. Only if you make a net overall loss is that not the case - and since I didn't go into P2P to make a net loss, I'm sticking with ISAs. To be fair, we are using one of our tax allowances to take full advantage of tax free P2P income outside of ISA but I still think ISAs should be used for holding equities for a very long time. I'm sort of going off P2P due to the time it takes me.
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IFISAcava
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Post by IFISAcava on Nov 8, 2018 23:48:50 GMT
Conversely it's the reason I do invest in P2P ISAs. As a taxpayer, If you make a net overall profit (P2P interest minus P2P capital losses), your return will always be higher in the ISA. Only if you make a net overall loss is that not the case - and since I didn't go into P2P to make a net loss, I'm sticking with ISAs. To be fair, we are using one of our tax allowances to take full advantage of tax free P2P income outside of ISA but I still think ISAs should be used for holding equities for a very long time. I'm sort of going off P2P due to the time it takes me. That helps a lot - 45% tax on P2P income is a problem. Anyway, I did the "hold equities for a very long time" option - starting via PEPS! - and decided to take some profits and put into P2P, as well as hold and rebuild S&S outside ISA and utilise CGT and dividend tax-free allowances annually, which I was losing as all S&S were inside ISA. I don't know the exact figures, and we are talking starting in the early 90's so 20+ years with less invested earlier on when allowances were less and I had less to spare, but the IRR was high single figures (8-9%). Very decent, but not too dissimilar to P2P. So I am happy using both approaches. Time is indeed the biggest issue - after a few years of doing this, it seems to me that I may be better off accepting the lower yield from the lower input platforms and instead enjoying spending time on other things.
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sl75
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Post by sl75 on Nov 9, 2018 7:50:16 GMT
It may also be significant that Lendy did not receive full FCA authorisation until after the end of the tax year - I have a vague recollection that another platform delayed declaring losses for tax purposes until after they'd received authorisation (and another vague recollection that only losses from authorised P2P platforms can be deducted from P2P income).
I anticipate plenty of P2P income for the foreseeable future against which to offset any relevant losses (including recoveries that various platforms are still making from loans that defaulted years ago), so don't really see it makes much difference WHICH tax year it gets deducted from. My own preference to "keep things tidy" is to use the figures provided by each platform - anything else needs a lot more "messy" paperwork to ensure that you (or someone who has to sort out your affairs on your behalf if you become incapacitated or worse) don't commit tax fraud by claiming the same deduction in multiple tax years.
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rrrupert
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Post by rrrupert on Nov 9, 2018 11:34:49 GMT
.... so don't really see it makes much difference WHICH tax year it gets deducted from...........
There is an opportunity cost to having a loss unclaimed. That money could be earning interest for you rather than effectively sitting with the inland revenue for years earning nothing. Ideally I would prefer to keep things simple. But I am not sure Lendy will ever admit to any irrecoverable loans, I am also not sure they will stay in business so I may well be forced in any case to make a claim for a loan being irrecoverable. I would rather do it now.
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pence
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Post by pence on Nov 9, 2018 13:56:47 GMT
On the subject of when is a p2p loan treated as irrecoverable (see pdf document) Interesting point is that you can only carry forward p2p losses for 4 years (see pdf document):
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