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Post by shanghaiscouse on Nov 25, 2019 11:51:48 GMT
OK its that time of year again when I am doing my tax return. 18/19 is when my bad debts started taking off, although not gone through the stratosphere until 19/20. But even for 18/19 I have over £10k of bad debt, but that rises to £22k for 19/20.
My understanding is:
1. FCs expenses are not tax deductible
2. Bad debts are tax deductible, but if the loss exceeds the income (heading that way for me in 19/20) you can offset it against other "innovative finance" gains, i.e. other P2P interest, hence makes sense for me not to close all of my accounts in other P2Ps because I need the interest income to offset losses against
3. Recoveries from previous years have to be booked as interest income in the current year
Any tips/ tricks from the tax pros out there?
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Stonk
Stonking
Posts: 735 
Likes: 658
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Post by Stonk on Nov 25, 2019 21:41:21 GMT
On my tax statement from FC, in the "investment income" section, the "Funding Circle servicing fee" is deducted from the "total interest paid by borrower", resulting in a bold-face line "income payments made to you".
Laid out thus, FC are very much suggesting that their fees are tax deductible, in the sense that they can reduce the interest you need to declare.
I have therefore always declared the reduced figure. If queried, then I would have shown HMRC the document that FC produced by way of explanation. It wouldn't actually make any difference in my situation anyway.
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blender
Member of DD Central
Posts: 5,719
Likes: 4,272
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Post by blender on Nov 25, 2019 22:00:02 GMT
Yes, the 1% fee is structured as a charge to the borrower - read the T&Cs. We receive only the net. This was sorted out a few years ago.
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Post by shanghaiscouse on Nov 26, 2019 14:06:17 GMT
Great news, thanks guys, that's £1,000 saved, almost made up for the £3,000 I lost on the shares.....
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Post by shanghaiscouse on Jan 9, 2020 13:53:17 GMT
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keitha
Member of DD Central
2024, hopefully the year I get out of P2P
Posts: 4,594
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Post by keitha on Jan 12, 2020 9:57:48 GMT
Yes, the 1% fee is structured as a charge to the borrower - read the T&Cs. We receive only the net. This was sorted out a few years ago. Given this and the way they are showing interest Selling Fee and fees, is anyone thinking as I do that we can also deduct the 1% selling fee as tax deductable
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blender
Member of DD Central
Posts: 5,719
Likes: 4,272
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Post by blender on Jan 12, 2020 10:15:06 GMT
Yes, the 1% fee is structured as a charge to the borrower - read the T&Cs. We receive only the net. This was sorted out a few years ago. Given this and the way they are showing interest Selling Fee and fees, is anyone thinking as I do that we can also deduct the 1% selling fee as tax deductable Unfortunately not against income tax. You pay tax on the interest, which is not reduced by the sale. It is not a fee paid to the platform. It is selling a loan part at a (forced) discount to another lender. Just the same as selling a loan part at a discount in the old days, when there was an SM. CGT is another matter, about which I know even less.
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