p2pfan
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Post by p2pfan on Apr 4, 2020 15:19:06 GMT
I've only been lending via AC for several months, but under the "Loans in Recoveries" section of my "Tax Statement" on the platform, it states:
"Total funds in loans put into recoveries in the period 6th Apr 2019 to 4th Apr 2020 £xxx.xx (this could be declared as a potential loss during this period)".
My understanding of the tax legislation is that you can only offset defaulted loans if there is no chance whatsoever of recovering them? Therefore, I find it surprising that I already have a fairly chunky sum that AC is suggesting could be offset against the P2P earnings on which I'll pay my tax?
I do lend significant sums via the automated accounts and so perhaps the reason I already have an fair amount I can offset against earnings for tax is because they were older loans.
Any advice please? I don't want to offset this sum if HMRC will think I'm jumping the gun when there is a good chance these loans will be recovered and therefore think I'm not adhering to their guidelines.
In a week when AC has had a lot of stick, I'd like to end with a brief thank you to AC for having such a user-friendly tax section, probably one of the very best I've seen on any P2P platform.
Thanks.
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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 Apr 4, 2020 15:33:40 GMT
I've only been lending via AC for several months, but under the "Loans in Recoveries" section of my "Tax Statement" on the platform, it states: "Total funds in loans put into recoveries in the period 6th Apr 2019 to 4th Apr 2020 £xxx.xx (this could be declared as a potential loss during this period)". My understanding of the tax legislation is that you can only offset defaulted loans if there is no chance whatsoever of recovering them? Therefore, I find it surprising that I already have a fairly chunky sum that AC is suggesting could be offset against the P2P earnings on which I'll pay my tax? I do lend significant sums via the automated accounts and so perhaps the reason I already have an fair amount I can offset against earnings for tax is because they were older loans. Any advice please? I don't want to offset this sum if HMRC will think I'm jumping the gun when there is a good chance these loans will be recovered and therefore think I'm not adhering to their guidelines. In a week when AC has had a lot of stick, I'd like to end with a brief thank you to AC for having such a user-friendly tax section, probably one of the very best I've seen on any P2P platform. Thanks. Its not no chance whatsoever, but no chance through non legal processes. The rules allow you to claim as losses any loans that cant be recovered without recourse to legal means or that have been declared as irrecoverable by the platform. In the case of AC (and most other platforms) they declare loans a eligible for loss relief once they have entered formal legal recovery ie insolvency proceedings such as administration, receivership, bankruptcy etc If these legal processes result in any recovery then that has to be declared as income for any loans that loss has been claimed HMRC advice here (specifically SAIM12050)
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duck
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Post by duck on Apr 4, 2020 15:34:18 GMT
.. My understanding of the tax legislation is that you can only offset defaulted loans if there is no chance whatsoever of recovering them? ... Thanks. Your understanding is incorrect. Rather than trying to type the detail have a look the link here Section 9 (SAIM1250) applies. EDIT ilmoro and I were posting at the same time.
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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 Apr 4, 2020 15:36:20 GMT
.. My understanding of the tax legislation is that you can only offset defaulted loans if there is no chance whatsoever of recovering them? ... Thanks. Your understanding is incorrect. Rather than trying to type the detail have a look the link here Section 9 (SAIM1250) applies. EDIT ilmoro and I were posting at the same time. Your link seems to loop back to your post
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duck
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Post by duck on Apr 4, 2020 15:43:28 GMT
Your link seems to loop back to your post Don't know why I bother, when I 'corrected' the link it then picked up on your post telling me my link wasn't working correctly.  
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p2pfan
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Post by p2pfan on Apr 4, 2020 15:50:07 GMT
Thanks a million for the advice guys.
I'm much clearer on the matter and it's good to see that we can all get loss relief at an earlier stage than I thought possible.
Sadly non-repayments of loans, both the interest and capital, will go through the roof in the coming tax year so the loss relief will soften some of our pain.
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duck
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Post by duck on Apr 4, 2020 16:17:59 GMT
Thanks a million for the advice guys. I'm much clearer on the matter and it's good to see that we can all get loss relief at an earlier stage than I thought possible. Sadly non-repayments of loans, both the interest and capital, will go through the roof in the coming tax year so the loss relief will soften some of our pain. You will need to keep an eye on losses in the next Tax Yr. Remember you can only offset against other P2P income so a balancing act may be required if you do mount up a lot of 'irrecoverable' loans. There is no benefit in over-claiming losses* (below your tax allowance) since you will have to declare any recoveries as income in the following Tax Year. That said with forbearance in play I suspect that there won't be many loans that will start down the 'legal' path so whilst they are not paying they will not be eligible for relief. *Unless it is beneficial to generate a loss for other purposes.
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sapphire
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Post by sapphire on Apr 4, 2020 17:57:25 GMT
Section SAIM12050 in the HMRC manual states when the loan "may" be treated as irrecoverable rather than when the loan "should" be treated as one.
As such, even if the P2P platform "certifies" the loan as being irrecoverable in the current tax year, can the lender opt *not* to offset this against the current year's P2P income and instead do so in a future tax year? (to optimise the income tax liability)
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duck
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Post by duck on Apr 12, 2020 5:22:44 GMT
Section SAIM12050 in the HMRC manual states when the loan "may" be treated as irrecoverable rather than when the loan "should" be treated as one. As such, even if the P2P platform "certifies" the loan as being irrecoverable in the current tax year, can the lender opt *not* to offset this against the current year's P2P income and instead do so in a future tax year? (to optimise the income tax liability) Since relief has become available I have taken the 'self deeming' approach with the approval of my accountants. This does mean I hold more spreadsheets and it also makes the possibility of a HMRC investigation more likely if the figures you submit do not tie up with those submitted by the Platforms. The basic point is that you do NOT have to claim relief even if it is available. Carrying forwards is possible but the rules have to be consulted and each loan checked against them. In the past I have chosen not to claim for defaulted loans when recovery via sale of assets will (almost certainly) cover the debt after costs. My preference is to wait a bit longer, not claim the relief and avoid a large cash dump that has to be declared in a following tax year. As always Tax is a very personal issue, you need to work out what is best for you but as you point out the key word is 'may'.
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Post by bikeman on Apr 13, 2020 18:11:39 GMT
I've only been lending via AC for several months, but under the "Loans in Recoveries" section of my "Tax Statement" on the platform, it states: "Total funds in loans put into recoveries in the period 6th Apr 2019 to 4th Apr 2020 £xxx.xx (this could be declared as a potential loss during this period)". Wow you're fkin lucky - AC have never declared ANY of my losses as non-recoverable.
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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 Apr 13, 2020 19:28:35 GMT
I've only been lending via AC for several months, but under the "Loans in Recoveries" section of my "Tax Statement" on the platform, it states: "Total funds in loans put into recoveries in the period 6th Apr 2019 to 4th Apr 2020 £xxx.xx (this could be declared as a potential loss during this period)". Wow you're fkin lucky - AC have never declared ANY of my losses as non-recoverable. Really, that doesn't sound right, which loans?. Nothing to stop you declaring them yourself if they meet the criteria though Id be cautious with anything covered by a PF as youll end up paying tax if the PF pays out down the line. Edit Oh those loans. Not in them so not really sure why they aren't in formal recovery and therefore don't qualify.
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Post by bikeman on May 16, 2020 20:12:02 GMT
Wow you're fkin lucky - AC have never declared ANY of my losses as non-recoverable. Really, that doesn't sound right, which loans?. Nothing to stop you declaring them yourself if they meet the criteria though Id be cautious with anything covered by a PF as youll end up paying tax if the PF pays out down the line. Edit Oh those loans. Not in them so not really sure why they aren't in formal recovery and therefore don't qualify. Because AC make it up as they go. My advice to everyone is don't get sucked in by the incentives, run while you can.
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tarq
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Post by tarq on May 17, 2020 8:14:23 GMT
I can't find the 'Legacy' style layout on the new platform, is it there but hiding somewhere?
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dead-money
Rocket to the Moon
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Post by dead-money on May 17, 2020 9:43:35 GMT
I can't find the 'Legacy' style layout on the new platform, is it there but hiding somewhere?
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ilmoro
Member of DD Central
'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 17, 2020 9:46:20 GMT
I can't find the 'Legacy' style layout on the new platform, is it there but hiding somewhere?
If it's not showing in the drop-down, F5 to refresh & it should reappear
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