Post by diamon89 on Sept 17, 2020 12:02:21 GMT
I guess many others are trying to figure out the tax treatment of all these irrecoverable loans.
Here's what I understand:
- Losses on a P2P loan to an individual can only be offset against other P2P income.
- Losses on any loan (inc. P2P) to a trader (i.e. a business loan, broadly speaking) can be usually offset against any capital gain (but see note below)
But the fairly new provision to allow P2P losses to by offset against P2P income seems to have wiped out the long-standing provision that you can treat a loss on a loan to a business as a capital loss. Can this really be right?
I'm relying on this document:
Income tax relief for irrecoverable P2P loans
This seems like a big deal. Capital losses can be kept for ages (forever?) to use until such time as you have a capital gain to offset them against. Has this relief really been withdrawn? Offsetting P2P losses against P2P interest isn't so helpful. I'm not very keen on P2P investments now, it would take me more than a lifetime to build up enough future P2P interest to offset the Funding Secure losses I've enjoyed.
Anyone else have any insight into this issue?
Here's what I understand:
- Losses on a P2P loan to an individual can only be offset against other P2P income.
- Losses on any loan (inc. P2P) to a trader (i.e. a business loan, broadly speaking) can be usually offset against any capital gain (but see note below)
But the fairly new provision to allow P2P losses to by offset against P2P income seems to have wiped out the long-standing provision that you can treat a loss on a loan to a business as a capital loss. Can this really be right?
I'm relying on this document:
Income tax relief for irrecoverable P2P loans
"[P2P business] loans that become irrecoverable on or after 6 April 2016: An irrecoverable loan that would have been eligible for capital gains relief as a capital loss under TCGA 1992 will no longer be eligible for that relief. This is because Section 2(3) of TCGA 1992 specifically gives priority to income tax reliefs. "
This seems like a big deal. Capital losses can be kept for ages (forever?) to use until such time as you have a capital gain to offset them against. Has this relief really been withdrawn? Offsetting P2P losses against P2P interest isn't so helpful. I'm not very keen on P2P investments now, it would take me more than a lifetime to build up enough future P2P interest to offset the Funding Secure losses I've enjoyed.
Anyone else have any insight into this issue?