JamesFrance
Member of DD Central
Port Grimaud 1974
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Post by JamesFrance on Dec 4, 2014 16:04:38 GMT
The new tax arrangement announced in the Autumn Statement should make Bondora more attractive for British residents. The high interest/high default model must have put many people off investing there. The only problem is that there are too few attractive loans for existing lenders, so they will take even longer to get into than they do already.
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duck
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Post by duck on Dec 5, 2014 16:10:24 GMT
Yes the change will certainly make a large difference.
My spreadsheets do a simple calc each month (and running totals)
(Interest received minus tax)minus +60day overdues from the month= my return ..... and then calcs a 'tax rate' based on the return to me. That 'tax rate' generally runs at 51/52% but hit a horrible 78% last month.
Lets hope this change comes into law, the sooner the better.
(I see complications in calculating recoveries and their status.......)
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Post by batchoy on Dec 5, 2014 16:53:52 GMT
(I see complications in calculating recoveries and their status.......) It shouldn't be that complicated it just means that platforms will have to declare loans as lost and what the loss in the principle is, but what it will mean that platforms won't be able to make loans that they have declared as lost magically disappear which is what has happened at least once on platform I used to use.
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duck
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Post by duck on Dec 5, 2014 17:04:35 GMT
(I see complications in calculating recoveries and their status.......) It shouldn't be that complicated it just means that platforms will have to declare loans as lost and what the loss in the principle is, but what it will mean that platforms won't be able to make loans that they have declared as lost magically disappear which is what has happened at least once on platform I used to use. I agree it shouldn't be too complicated I was thinking more that Bondora are currently using their +60 day ("The loan defaulted and entire loan turned payable") system but if I'm not mistaken the current European default is set at +120 days. Then when small payments are made is it capital or interest? Need to keep track of each recovery payment.
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pikestaff
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Post by pikestaff on Dec 5, 2014 23:25:51 GMT
HMRC's definition of a loss remains to be seen. If it's like investments in shares the loan will need to be of negligible value and this may not be the case until there is negligible prospect of future recovery.
If we end up with this kind of definition I can just about imagine UK platforms building their reporting around it, but an overseas platform? Hmmm.
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duck
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Post by duck on Dec 6, 2014 4:55:50 GMT
HMRC's definition of a loss remains to be seen. If it's like investments in shares the loan will need to be of negligible value and this may not be the case until there is negligible prospect of future recovery. If we end up with this kind of definition I can just about imagine UK platforms building their reporting around it, but an overseas platform? Hmmm. ..... and therein lies the problem, detail. My communications with HMRC regarding p2p (in particular Bondora) did not give me a comfy feeling that were not making it up as they went along which is why I decided to 'protect' myself by getting as much in writing as possible.
Whilst I would like to be optimistic I very much doubt if the picture will be totally clear wrt Bondora.
pikestaff I take your point wrt UK platforms and their lower default rates but with Bondora I believe we all 'accept' that the defaults will be higher but this is balanced by the higher interest. I'm getting some decent recoveries on early defaults (first full repayment in the last week) but from a platform point of view it can never be in their interest to declare 'loss' at an early stage.
A platform needs to be seen to chase the cash in order to build investor confidence and to instil in borrowers that repayments have to be made ..... and that takes time. So when is a loss actually declarable, possibly a very long time after repayments stop ..........
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jo
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dead
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Post by jo on Dec 6, 2014 9:07:44 GMT
I suspect (well, a bit more than suspect, actually), that unless you're lending in larger amounts, on a corporate basis - HMRC care little about your average retail investor - provided you can demonstrate 'best effort', and are consistent.
Think of the utter 'mark-to-model' nonsense that KPMG and their like sign-off on for financial institutions each year. In the interest of not faffing around on guesswork and monitoring individual FX rates and the like, I have decided, and will defend, a similar strategy...see other thread for more detail.
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pikestaff
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Post by pikestaff on Dec 7, 2014 8:50:22 GMT
...So when is a loss actually declarable, possibly a very long time after repayments stop .......... Well, exactly. To give an example from FC, where my sole remaining exposure is defaulted loans, I have for loan #2419: "21 Feb 2014 The guarantor has entered a voluntary arrangement with his creditors on 29 January 2014. The expected dividend for unsecured creditors is 57.25p in the £ and a first dividend is to be made shortly after first year of the arrangement. Subsequent dividends will be distributed to creditors on each subsequent anniversary. As and when we are in receipt of sufficient funds, We will make payments to lenders."If the "negligible value" rule applies, it might not be possible to claim a loss until all significant dividends have been paid, which could be many years. But at least in this case we should eventually have a definite end point. On some other platforms it may not be easy to know. I hope practical issues like this are addressed in the consultation.
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