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Post by mrclondon on Nov 2, 2019 13:17:14 GMT
From SAIM 12000 (pg 16 of March 2016 pdf) Rightly are wrongly, most people are assuming that the easiest way to manage p2p loss relief is to take the date administrators/receivers are appointed over the borrower/security as the point at which they treat the loan as being irrecoverable. So given the majority of the Lendy loans are ending up in administration/receivership either last tax year or this, your scope for rolling forward loss releif depends largely on the amount of p2p interest last year/this year already being covered by the loss relief. I believe that somewhere it is stated you must declare on the tax return that you are rolling forward loss relief. I'm not an expert in this area.
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daveb
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Post by daveb on Nov 2, 2019 15:38:07 GMT
It's pretty galling, because for many of us there were decent returns a few years ago on which lots of tax was paid, and few losses then declared (even though in hindsight they might look inevitable). As defaults have rocked confidence the income stream has dried up just as there are losses to set against the diminishing income. What we really need is the ability to roll the losses back to previous years that had more P2P income.
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Post by mrclondon on Nov 2, 2019 15:51:16 GMT
Its worth remembering that taxable p2p income includes recoveries where loss relief has been previously claimed as well as interest.
So those who claimed DFL012 as a loss for 2018-19 will face the 45% recovery just received being taxable in 2019-20
I've not yet got my head around whether loss relief for this year's loans going bad (or unused from prior years rolled forward) can be applied against p2p interest and p2p recoveries ... anyone able to comment on this ( pikestaff ? ilmoro ? ) . On another read of SAIM 12000 (pg 9 of pdf) so if the recoveries are to be treated as additional interest, it seem probable that loss releif could be applied.
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pikestaff
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Post by pikestaff on Nov 4, 2019 8:10:09 GMT
Its worth remembering that taxable p2p income includes recoveries where loss relief has been previously claimed as well as interest.
So those who claimed DFL012 as a loss for 2018-19 will face the 45% recovery just received being taxable in 2019-20
I've not yet got my head around whether loss relief for this year's loans going bad (or unused from prior years rolled forward) can be applied against p2p interest and p2p recoveries ... anyone able to comment on this ( pikestaff ? ilmoro ? ) . On another read of SAIM 12000 (pg 9 of pdf) so if the recoveries are to be treated as additional interest, it seem probable that loss releif could be applied. Yes, that's right. With regard to your earlier question/comment, there is no need to declare on the tax return that you are rolling forward loss relief. However, you do need to keep proper records to support any future claim. Extract from HMRC guidance at www.gov.uk/guidance/peer-to-peer-lending#claiming-tax-relief-on-unpaid-loans:
How to claim tax relief in a tax return
Peer to peer interest should be entered on form SA101 Additional Information under Other UK income, Interest from gilt-edged and other UK securities, deeply discounted securities and accrued income profits.
When completing the SA101 form enter the:
- box 3 - interest received gross less any bad debt relief from all platforms
- box 1 - interest received net less any bad debt relief from all platforms
- box 2 - full amount of tax deducted from the interest
Any excess relief for peer to peer bad debts available to carry forward does not need to be included on the tax return, but the lender should keep records of any carry forward relief in order to make a correct and complete claim in a tax return for a future period.
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Post by bracknellboy on Nov 4, 2019 8:35:32 GMT
.... so if the recoveries are to be treated as additional interest, it seem probable that loss releif could be applied.
Any excess relief for peer to peer bad debts available to carry forward does not need to be included on the tax return, but the lender should keep records of any carry forward relief in order to make a correct and complete claim in a tax return for a future period.I've not read all this thread, so my apologies. Is the high level summary of this that loss relief can be carried forward for x years ? And in practise, what does that mean ? As I understood it, interest in any given tax year could be offset up to the limit of any losses (maybe that phraseology is wrong but...). So if loss relief can be carried forward, does that mean that if your losses exceed taxable interest in a given year, you can somehow then get relief against other taxable income, up to the limit of prior unused loss relief (i.e. accumulated previous years net taxable p2p income).
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Greenwood2
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Post by Greenwood2 on Nov 4, 2019 8:56:37 GMT
.....
Any excess relief for peer to peer bad debts available to carry forward does not need to be included on the tax return, but the lender should keep records of any carry forward relief in order to make a correct and complete claim in a tax return for a future period. I've not read all this thread, so my apologies. Is the high level summary of this that loss relief can be carried forward for x years ? And in practise, what does that mean ? As I understood it, interest in any given tax year could be offset up to the limit of any losses (maybe that phraseology is wrong but...). So if loss relief can be carried forward, does that mean that if your losses exceed taxable interest in a given year, you can somehow then get relief against other taxable income, up to the limit of prior unused loss relief (i.e. accumulated previous years net taxable p2p income). You can carry losses forward to offset against future P2P interest (not general taxable income), I think it's for up to four years. Tax on future recoveries of P2P debt could be offset as well. Unfortunately I think quite a few lenders may have big losses and not much future P2P income to offset against.
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Post by bracknellboy on Nov 4, 2019 9:12:03 GMT
I've not read all this thread, so my apologies. Is the high level summary of this that loss relief can be carried forward for x years ? And in practise, what does that mean ? As I understood it, interest in any given tax year could be offset up to the limit of any losses (maybe that phraseology is wrong but...). So if loss relief can be carried forward, does that mean that if your losses exceed taxable interest in a given year, you can somehow then get relief against other taxable income, up to the limit of prior unused loss relief (i.e. accumulated previous years net taxable p2p income). You can carry losses forward to offset against future P2P interest (not general taxable income), I think it's for up to four years. Tax on future recoveries of P2P debt could be offset as well. Unfortunately I think quite a few lenders may have big losses and not much future P2P income to offset against. ah, ok. So if in year 1 your losses exceed interest, you can carry forward loss relief to offset against p2p earnings in year 2. But if your earnings exceed your losses in year 1, but in year 2 your losses exceed earnings, then you can't offset against the net earnings in year 1 (which in effect, which is why I was a bit thrown by the possibility, would amount to offsetting against other earnings).
As you say, I think a good few of us may well be in a position where net losses are going to exceed earnings, and unlikely to be in a position to offset against future p2p earnings.
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IFISAcava
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Post by IFISAcava on Nov 4, 2019 9:41:47 GMT
You can carry losses forward to offset against future P2P interest (not general taxable income), I think it's for up to four years. Tax on future recoveries of P2P debt could be offset as well. Unfortunately I think quite a few lenders may have big losses and not much future P2P income to offset against. ah, ok. So if in year 1 your losses exceed interest, you can carry forward loss relief to offset against p2p earnings in year 2. But if your earnings exceed your losses in year 1, but in year 2 your losses exceed earnings, then you can't offset against the net earnings in year 1 (which in effect, which is why I was a bit thrown by the possibility, would amount to offsetting against other earnings).
As you say, I think a good few of us may well be in a position where net losses are going to exceed earnings, and unlikely to be in a position to offset against future p2p earnings.
if you have spare offset, and are already fully ISA'd up, you could always put some in a low risk p2p* for some additional tax free income in this situation. *yes, I know some here would consider that an oxymoron, in which case just add an -er on the end of low.
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