|
|
Post by dingdong on Jan 18, 2020 9:57:58 GMT
Have lost 2k in the Crowdstacker BurningMan default farce which clearly is never going to be seen again. This was held in an Crowdstacker IFISA
Can this be offset against P2P interest gained elsewhere - I think I read somewhere this was not allowed although none of the IFISAs that I have make this clear?
If not can I count this IFISA loss against capital gains made elsewhere instead?
|
|
archie
Posts: 1,866 
Likes: 1,861
|
Post by archie on Jan 18, 2020 10:02:28 GMT
There's no tax charged in an IFISA so losses cannot be offset.
|
|
blender
Member of DD Central
Posts: 5,719
Likes: 4,272
|
Post by blender on Jan 18, 2020 10:37:23 GMT
I agree with Archie. The IFISA wrapper takes the account out of the income tax and CGT regimes. You benefit from the full gain and have to stand the losses. People may not consider this when they use an IFISA to get their interest tax free. In p2p you usually have capital losses but rarely have gains. An IFISA can accentuate the downside capital risk. It's more suited to an account with defined returns (in normal market conditions) where your risk is more likely to be in liquidity rather than loss.
|
|
|
|
Post by dingdong on Jan 18, 2020 10:54:59 GMT
OK thanks. It's pretty bad that all these platforms encourage people to move into IFISAs without explaining this as a major downside.
|
|
IFISAcava
Member of DD Central
Posts: 3,692
Likes: 3,018
|
Post by IFISAcava on Jan 18, 2020 11:34:20 GMT
The lack of being able to offset capital losses against interest in IFISAs is only an issue if you foresee a high chance of making overall losses across all your P2P investments over several years. Otherwise, the tax savings on net gains (interest minus capital losses) will ALWAYS be greater than any lost tax relief (assuming you are a taxpayer - if you aren't then no need for an IFISA in the first place).
And if you foresee a high chance of making overall losses on your P2P, then why would you be investing in P2P?
|
|
blender
Member of DD Central
Posts: 5,719
Likes: 4,272
|
Post by blender on Jan 18, 2020 11:52:20 GMT
The lack of being able to offset capital losses against interest in IFISAs is only an issue if you foresee a high chance of making overall losses across all your P2P investments over several years. Otherwise, the tax savings on net gains (interest minus capital losses) will ALWAYS be greater than any lost tax relief (assuming you are a taxpayer - if you aren't then no need for an IFISA in the first place). And if you foresee a high chance of making overall losses on your P2P, then why would you be investing in P2P? Of course we don't invest in anything where we expect we will lose overall (except for tax avoidance schemes). The risky loans are the ones with high interest (we hope) and the temptation is to place those loans in an ISA to save the most tax on interest. Platforms are not good at explaining how to mitigate against making large losses on their loans, and then finding you have no tax relief.
|
|
IFISAcava
Member of DD Central
Posts: 3,692
Likes: 3,018
|
Post by IFISAcava on Jan 18, 2020 12:06:05 GMT
The lack of being able to offset capital losses against interest in IFISAs is only an issue if you foresee a high chance of making overall losses across all your P2P investments over several years. Otherwise, the tax savings on net gains (interest minus capital losses) will ALWAYS be greater than any lost tax relief (assuming you are a taxpayer - if you aren't then no need for an IFISA in the first place). And if you foresee a high chance of making overall losses on your P2P, then why would you be investing in P2P? Of course we don't invest in anything where we expect we will lose overall (except for tax avoidance schemes). The risky loans are the ones with high interest (we hope) and the temptation is to place those loans in an ISA to save the most tax on interest. Platforms are not good at explaining how to mitigate against making large losses on their loans, and then finding you have no tax relief. But it doesn't matter overall, high or low interest/ high or low risk, whatever, if you make an overall profit on P2P you are better off having it all in an IFISA. Where it might be trickier is if you don't have enough ISA allowance and so have to decide which platforms/loans to put in an IFISA and which not. Even then, if you expect any profit (i.e. >50% chance of a profit), it's better in an ISA. I don't have to choose as I won't invest outside an ISA as the tax makes it not worthwhile, but if I did have to choose I'd look at the estimated chances of making a loss (interest minus defaults) and keep those with the highest risk outside the ISA. Since the higher interest should on average be calculated to counter the higher risk, you are then banking on being better at estimating risk than the loan originator.
|
|
|
|
Post by sas100 on Jan 18, 2020 19:57:21 GMT
I have a good bit in that loan is it Def a complete write off? When I have spoken to them on the phone they have told me to wait for the administration process to be over to see what the final outcome would be and that they were looking a fair result for investors whatever that means
|
|
