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Post by bobthebuilder on Mar 10, 2021 3:41:08 GMT
At the risk of oversimplifying... you can't offset any loss against profits elsewhere, but you can certainly offset them against other P2P profits, also known as the interest that AC have paid you. If you were to cash in with a small exit penalty, could you not just offset the exit fee against the final reported interest? EG £1000 capital + £50 interest - £2 exit fee reported as £48 interest. I have a strong intuition that you may be making this harder for yourself than you need to. I know that recent posts in this thread have been from the point of view of lending by limited companies, but I'd be interested in knowing whether a retail investor who sold an access account position at a discount that had been acquired in the primary market at par could offset the loss against interest paid by AC. It would be really useful if I could, but I suspect that the losses I as an individual can offset against P2P interest are those that result from borrower default, not those I choose to take because of the illiquidity of the access accounts. Any view on this, backed up by HMRC documentation, would be appreciated.
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Post by bracknellboy on Mar 10, 2021 8:26:12 GMT
At the risk of oversimplifying... you can't offset any loss against profits elsewhere, but you can certainly offset them against other P2P profits, also known as the interest that AC have paid you. If you were to cash in with a small exit penalty, could you not just offset the exit fee against the final reported interest? EG £1000 capital + £50 interest - £2 exit fee reported as £48 interest. I have a strong intuition that you may be making this harder for yourself than you need to. I know that recent posts in this thread have been from the point of view of lending by limited companies, but I'd be interested in knowing whether a retail investor who sold an access account position at a discount that had been acquired in the primary market at par could offset the loss against interest paid by AC. It would be really useful if I could, but I suspect that the losses I as an individual can offset against P2P interest are those that result from borrower default, not those I choose to take because of the illiquidity of the access accounts. Any view on this, backed up by HMRC documentation, would be appreciated. Personally I think this is simple. The guidance from HMRC on Peer to Peer in relation to personal taxation is at this link: www.gov.uk/guidance/peer-to-peer-lendingThat allows for tax relief on losses arising from loans that are not repaid. That is it. No mention of or indeed recognition of secondary trading. Therefore by act of omission, there is no allowance for relief on trading losses. Unless someone comes up with an entirely different set of guidance, but this is the entirety of the guidance referenced from HMRC self assessment. Trading within a company, as you noted, will be different. I have no knowledge on that, but it would seem logical that can be treated as some form of (capital ?) loss.
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jlend
Member of DD Central
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Post by jlend on Mar 10, 2021 9:10:31 GMT
At the risk of oversimplifying... you can't offset any loss against profits elsewhere, but you can certainly offset them against other P2P profits, also known as the interest that AC have paid you. If you were to cash in with a small exit penalty, could you not just offset the exit fee against the final reported interest? EG £1000 capital + £50 interest - £2 exit fee reported as £48 interest. I have a strong intuition that you may be making this harder for yourself than you need to. I know that recent posts in this thread have been from the point of view of lending by limited companies, but I'd be interested in knowing whether a retail investor who sold an access account position at a discount that had been acquired in the primary market at par could offset the loss against interest paid by AC. It would be really useful if I could, but I suspect that the losses I as an individual can offset against P2P interest are those that result from borrower default, not those I choose to take because of the illiquidity of the access accounts. Any view on this, backed up by HMRC documentation, would be appreciated. I am not vouching that the following is correct or not. Merely passing on the info. 4th Way spoke to HMRC and accountants and wrote a review about their findings on taxation, including on selling at a profit on secondary markets and their understanding of the impact on CGT. www.4thway.co.uk/guides/how-is-peer-to-peer-lending-taxed/You may find other sources take a different view. They didn't write anything on if they have collated any info on what happens if you sell at a loss. Whether you think it is worth asking them is obviously up to you.
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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 Mar 10, 2021 9:10:37 GMT
I know that recent posts in this thread have been from the point of view of lending by limited companies, but I'd be interested in knowing whether a retail investor who sold an access account position at a discount that had been acquired in the primary market at par could offset the loss against interest paid by AC. It would be really useful if I could, but I suspect that the losses I as an individual can offset against P2P interest are those that result from borrower default, not those I choose to take because of the illiquidity of the access accounts. Any view on this, backed up by HMRC documentation, would be appreciated. Personally I think this is simple. The guidance from HMRC on Peer to Peer in relation to personal taxation is at this link: www.gov.uk/guidance/peer-to-peer-lendingThat allows for tax relief on losses arising from loans that are not repaid. That is it. No mention of or indeed recognition of secondary trading. Therefore by act of omission, there is no allowance for relief on trading losses. Unless someone comes up with an entirely different set of guidance, but this is the entirety of the guidance referenced from HMRC self assessment. Trading within a company, as you noted, will be different. I have no knowledge on that, but it would seem logical that can be treated as some form of (capital ?) loss. Trading losses/gains are covered by CGT rules but only for trades not involving the original loan part i.e. if you invested in a loan then sold it wouldn't impact CGT, if the purchaser then sold it it would. How do you determine whether AA holdings are original loan parts or not would seem to be the complicating factor? Edit Ha, crossed with jlend again, uncanny sense of timing currently
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Post by Companion Cube on Mar 10, 2021 9:16:27 GMT
I know that recent posts in this thread have been from the point of view of lending by limited companies, but I'd be interested in knowing whether a retail investor who sold an access account position at a discount that had been acquired in the primary market at par could offset the loss against interest paid by AC. It would be really useful if I could, but I suspect that the losses I as an individual can offset against P2P interest are those that result from borrower default, not those I choose to take because of the illiquidity of the access accounts. Any view on this, backed up by HMRC documentation, would be appreciated. Personally I think this is simple. The guidance from HMRC on Peer to Peer in relation to personal taxation is at this link: www.gov.uk/guidance/peer-to-peer-lendingThat allows for tax relief on losses arising from loans that are not repaid. That is it. No mention of or indeed recognition of secondary trading. Therefore by act of omission, there is no allowance for relief on trading losses. Unless someone comes up with an entirely different set of guidance, but this is the entirety of the guidance referenced from HMRC self assessment. Trading within a company, as you noted, will be different. I have no knowledge on that, but it would seem logical that can be treated as some form of (capital ?) loss. I bet that they have a mechanism in place for taxing trading profits though. 
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Post by bobthebuilder on Mar 11, 2021 1:37:45 GMT
Rather confirms my suspicions. So AC have created a product that you can never fully exit without taking a loss and you can't even offset that loss against interest for tax purposes.
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alender
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Post by alender on Mar 11, 2021 8:40:38 GMT
Rather confirms my suspicions. So AC have created a product that you can never fully exit without taking a loss and you can't even offset that loss against interest for tax purposes. The problem with this product is that it is unique, it is some sort of account/trading instrument hybrid where parts of the product can be removed from trading at any time made more likely by lender fees. The trading is OTC from one company which can removed it at any time.
We can all guess the tax treatment of sales on the SM, some with good knowledge and helpful advice which narrow to possibilities and other who just think it is easy. Although it understandable that companies like AC do not give tax advice in this particular circumstance because of the uniqueness of the product I believe AC should have got clarification from HMRC or some tax experts before the product was launched, as can be seen no one really knows where any of us stand.
The assets and cash element are constantly changing and the assets are in different states moving from performing debt to various suspended states. It has liabilities to future tranches, a PF which is has funded from the account but less during the stressed times when it needs it most due to lender fees. It has a variable interest rate set by AC at what they decide and the option to add additional fees again when AC decide as is the case now with the lender fee. If you chose you can have erratic repayments based on decisions taken by AC but not based on any definable criteria, the rules on how much each lender receives are set by AC and can change at any time, we are now on the third set. No one outside of AC has any idea if it will take on new loans, if fact no clear policy on the future of the accounts/tradable instruments. There is no proper (if any) valuation so no NAV and no audit of the state of the loans just that assigned by AC. No official reporting on the cash element or the totals for loans in different states you have to work this out for yourselves
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theta
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Post by theta on Mar 11, 2021 12:44:34 GMT
One could consider an Access Account as similar to a closed end fund. What happens inside the fund is irreverent to the end investor.
Interest payments are the equivalent of cash dividends, taxed as interest in this case.
Sales at any price other than the original purchase price will result in capital gains/losses, taxed accordingly.
If one never transacts in the SM, there will never be capital gains/losses.
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cb25
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Post by cb25 on Mar 22, 2021 9:01:09 GMT
Haven't seen this for a while and am sure it won't last, but Buy/Sell rates for £10K currently 0.1%/0.2% (usually 0.0%/0.1%)
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dead-money
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Post by dead-money on Mar 22, 2021 18:30:30 GMT
Haven't seen this for a while and am sure it won't last, but Buy/Sell rates for £10K currently 0.1%/0.2% (usually 0.0%/0.1%) Waiting for it to hit 8% / 10% following today's typically long-winded and opaque email...
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alender
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Post by alender on Mar 22, 2021 20:16:13 GMT
Haven't seen this for a while and am sure it won't last, but Buy/Sell rates for £10K currently 0.1%/0.2% (usually 0.0%/0.1%) Waiting for it to hit 8% / 10% following today's typically long-winded and opaque email... It would be far better for AC to publish the details on the new changes than send out an email with poses more questions than it answers.
Some questions this raises.
Are there going to be 2 PFs. Are there going to be 0, 1 or 2 SMs, I assume the new lending accounts will not have an SM otherwise where is the new money coming from, will the SM be closed for both accounts as who will want to buy into closed accounts. Will the exit accounts still be funding future tranches. Will the interest rates be same at the start, if so will there be guarantees they remain the same. Will bonus be used to attract money to the new lending account so in effect giving differential interest rates between the accounts. - How will you exit the new lending accounts, via a different queue or do switch to the exit accounts or are they locked forever, in which case AC should change the name on these accounts. Perhaps AC will let you have some of your funds as and when they see fit like the current situation.
- Can you switch from the exit accounts to the new lending accounts if you change your mind, if so is it free or is there a penalty.
Please AC do not go off half cocked, get all the information published at one time not just a general plan without proper details. It is this type of thing that spooks the market.
Interesting parts in the Email
We’ve been working very hard behind the scenes to improve liquidity in the Access Accounts and to materially reduce the withdrawal queue.
Is it really that hard, just pay out the money owed to investors from the cash in the accounts from the repaid loans as per T&Cs when the lenders invested.
we presently believe that what is left of the withdrawal queue may be entirely eliminated over the coming months.
then goes onto say
we’re now pleased to announce we will be recommencing new retail lending next month
and
we have developed what we are referring to as an “Exit Account”
What do they mean by coming months, that could be anything from a few to many years, after all any month in the future is coming month.
So what are AC saying, take your choice of
Do AC believe the withdrawal queue will be eliminated in the new and exit accounts, if so why do we need an exit account Will it just be the exit account in which case are AC saying if you choses the exit account they believe you will be out in the coming months which implies no locked loans and no defaults that cannot be handled by the PF. - If you will be able to get your funds out of the exit account exit where are these funds coming from, if it is repaid loans this could take up to 5 years, is this is what is meant by coming months.
The big question is do you trust AC to lock up your funds in the new accounts or trust them not to turn the exit accounts into some second class accounts which may look fine at the start but as time goes on be like so many other AC dead accounts, after all AC will have no interest in these accounts.
In hindsight I guess this was inevitable, with the new ISA season and the withdrawals carried on as they are the queue would have been gone in a few months leaving the AAs much smaller than AC would like so AC had to come up with a new way to lock in lender funds. A new account paying commission on new loans to AC and an exit account which could well keep you locked in until the last loan repays or AC finally decide to use the PF for the loans which will never pay out if of course the PF is not depleted by current or future lender fees.
The one thing we can be certain of is that AC will keep changing the rules whenever they like with no consultation to the lenders.
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cb25
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Post by cb25 on Mar 22, 2021 20:40:52 GMT
Waiting for it to hit 8% / 10% following today's typically long-winded and opaque email... It would be far better for AC to publish the details on the new changes than send out an email with poses more questions than it answers.
Some questions this raises.
Are there going to be 2 PFs. Are there going to be 0, 1 or 2 SMs, I assume the new lending accounts will not have an SM otherwise where is the new money coming from, will the SM be closed for both accounts as who will want to buy into closed accounts. - ...
The big question is do you trust AC to lock up your funds in the new accounts ... All good questions, not just those above. If they remove the SM from the Exit Account, lenders will be back to being locked in. Clearly, that won't be a step forward. If they announced 'no SM in the Exit Account' in an email, probably see a rush to the door using whatever discounts were available.
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Post by Badly Drawn Stickman on Mar 22, 2021 21:36:33 GMT
It would be far better for AC to publish the details on the new changes than send out an email with poses more questions than it answers.
Some questions this raises.
Are there going to be 2 PFs. Are there going to be 0, 1 or 2 SMs, I assume the new lending accounts will not have an SM otherwise where is the new money coming from, will the SM be closed for both accounts as who will want to buy into closed accounts. - ...
The big question is do you trust AC to lock up your funds in the new accounts ... All good questions, not just those above. If they remove the SM from the Exit Account, lenders will be back to being locked in. Clearly, that won't be a step forward. If they announced 'no SM in the Exit Account' in an email, probably see a rush to the door using whatever discounts were available. Speaking as an AC novice (so happy to be enlightened) are there really that many options? As an appeasement a 'new' variant is being created to allow people to opt out of the account returning to previous trading behavior (ish). Presumably both variants would need a withdrawal system (probably short term as a SM), nobody actually interested in remaining with AC 'as was' would invest in anything but the 'new loans variant' consequently the exit version would have no new funds added and probably release funds slower than the new classic. Really not a choice (except for sulking purposes) in reality, just a cosmetic exercise in 'offering options'. Personally I would be happy for people to start panic selling at high discounts and would be happy to aid them. whilst at the same time think they had lost the plot.
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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 Mar 22, 2021 21:45:36 GMT
Erm, where do you get new lending accounts from? I see no reference in the email to that. The AA accounts are just going to start lending again and operate as before but I assume with the SM available for access while there is still a queue.
So existing AA operating 'normally' or a separate account with their loan holdings in the AA at the point of separation for those not wishing to fund new loans.
The market is unspooked so far
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alender
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Post by alender on Mar 22, 2021 22:27:09 GMT
Erm, where do you get new lending accounts from? I see no reference in the email to that. The AA accounts are just going to start lending again and operate as before but I assume with the SM available for access while there is still a queue. So existing AA operating 'normally' or a separate account with their loan holdings in the AA at the point of separation for those not wishing to fund new loans. The market is unspooked so far The new lending accounts are the accounts where there is to be new lending, this was stopped as part of the lock in process, if as before refers to pre lock in they will obviously not operate in the same way as there will limited or no withdrawals.
From the email
we have developed what we are referring to as an “Exit Account"
That to me implies 2 different accounts types otherwise why would AC refer to an Exit Account.
If the AAs are operating 'normally' there would not be a withdraw queue and lock in.
How can the AAs with new lending operate as they did before, there is an SM, while this is in place no new money will enter the accounts therefore the SM has to go. Repaid money was partly used to fund withdrawals, are all withdrawals going to be stopped or severely limited to fund new loans if so this is not normal before or after the lock in.
These new lending accounts will be further removed from the name of the account, i.e. ACCESS.
However if we opt for the Exit Accounts how can we trust AC to do the right thing as AC have no interest in these accounts (no new commission etc) and a poor track record with the defunct accounts. At the very least how can we be sure AC will not keep changing the rules to suit AC at the rate they are going we will have more rule changes than the Government's Covid rules.
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