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Post by shanghaiscouse on Nov 2, 2020 9:08:10 GMT
Well, not sure if anyone watches this thread anymore but I am doing my tax return and from FC I have 19k interest and 31k bad debts. This is because I pulled most of the money out in the previous tax year but the bad debts kept on a'comin. Anyone have experience of deducting the whole bad debt against income?
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Greenwood2
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Post by Greenwood2 on Nov 2, 2020 10:13:42 GMT
Well, not sure if anyone watches this thread anymore but I am doing my tax return and from FC I have 19k interest and 31k bad debts. This is because I pulled most of the money out in the previous tax year but the bad debts kept on a'comin. Anyone have experience of deducting the whole bad debt against income? I assume you could deduct 19k (to declare zero P2P income) and carry forward the remaining 12k bad debt for up to 4 years (if you still have any P2P income). If you have other P2P income this year you can use that against the FC losses as well. All as I understand it! Edit: I've never actually tried declaring zero P2P income due to bad debt, but I don't see it should be a problem.
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Post by shanghaiscouse on Nov 2, 2020 10:51:05 GMT
thanks, yes I see all these "innovative finance" gains and losses can be offset, so I can use whatever bad debts in funding circle against gains in say Ratesetter, but if recoveries are made in future years they are taxable. Interestingly, it seems the Funding Circle tax situation is better because we get allocated specific loans and hence they can trace bad debts directly to us, whereas in say Ratesetter you don't get allocates specific loans and have a shared provision fund so you can't offset your losses. So any comparison of FC and RS needs to take this into account.
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Greenwood2
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Post by Greenwood2 on Nov 2, 2020 11:17:18 GMT
thanks, yes I see all these "innovative finance" gains and losses can be offset, so I can use whatever bad debts in funding circle against gains in say Ratesetter, but if recoveries are made in future years they are taxable. Interestingly, it seems the Funding Circle tax situation is better because we get allocated specific loans and hence they can trace bad debts directly to us, whereas in say Ratesetter you don't get allocates specific loans and have a shared provision fund so you can't offset your losses. So any comparison of FC and RS needs to take this into account. In RS effectively you don't have any losses because you get 100% back from the provision fund (hopefully anyway).
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slippery
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Post by slippery on Nov 2, 2020 11:57:02 GMT
Post edited - crossed with G2 response re no RS losses (to date)
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IFISAcava
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Post by IFISAcava on Nov 2, 2020 13:44:29 GMT
thanks, yes I see all these "innovative finance" gains and losses can be offset, so I can use whatever bad debts in funding circle against gains in say Ratesetter, but if recoveries are made in future years they are taxable. Interestingly, it seems the Funding Circle tax situation is better because we get allocated specific loans and hence they can trace bad debts directly to us, whereas in say Ratesetter you don't get allocates specific loans and have a shared provision fund so you can't offset your losses. So any comparison of FC and RS needs to take this into account. which Ratesetter losses?
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Post by shanghaiscouse on Nov 2, 2020 15:05:01 GMT
RS has losses too but they are absorbed by the provision fund, which you pay in to, which is a loss. So in the RS model you can't see the losses, all you can see are additional contributions to the provision fund. These additional contributions cannot be offset as tax losses. In Funding Circle, there is no provision fund, each investor is directly allocated the loan parts and credit losses, so you can get a deduction for the loss immediately. If both had equal credit losses, the FC model would deliver superior returns by virtue of its tax structuring, although returns vary as loan allocation is arbitrary. In RS model everyone shares losses equally which is less risky but you can't get any tax deduction.
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Post by shanghaiscouse on Nov 2, 2020 15:05:51 GMT
although a bit moot now considering both have stopped lending and borrowing!
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ashtondav
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Post by ashtondav on Nov 2, 2020 18:00:09 GMT
although a bit moot now considering both have stopped lending and borrowing! Which is why Zopa remains interesting. Business as usual there - yes, I know usual caveats about achieving returns apply
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Post by pauljoanss on Nov 7, 2020 17:45:30 GMT
I am doing my tax return (first time I have had to fill a form) and have £1088 FC income after Funding Service fee. I also have £699 "Total eligible debt in period".
Do I just claim £1088 - 699 as the total interest or is the bad debt declared by some other method?
I also notice I had £248 bad debits in the previous tax year, is this a lost cause?
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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 Nov 7, 2020 19:21:27 GMT
I am doing my tax return (first time I have had to fill a form) and have £1088 FC income after Funding Service fee. I also have £699 "Total eligible debt in period". Do I just claim £1088 - 699 as the total interest or is the bad debt declared by some other method? I also notice I had £248 bad debits in the previous tax year, is this a lost cause? Yes. Declare the net income (interest-debt). It is entered under Other Income, gilts, oeics etc not bank interest.
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Greenwood2
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Post by Greenwood2 on Nov 7, 2020 20:09:08 GMT
I am doing my tax return (first time I have had to fill a form) and have £1088 FC income after Funding Service fee. I also have £699 "Total eligible debt in period". Do I just claim £1088 - 699 as the total interest or is the bad debt declared by some other method? I also notice I had £248 bad debits in the previous tax year, is this a lost cause? Declare the difference but it might be sensible to explain what you have deducted in the notes. You should claim in the year the loss arises, but you can change your tax return (for a couple? of years back) if you didn't do a tax return last year I would contact HMRC to declare the previous years loss.
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blender
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Post by blender on Nov 7, 2020 23:14:46 GMT
I am doing my tax return (first time I have had to fill a form) and have £1088 FC income after Funding Service fee. I also have £699 "Total eligible debt in period". Do I just claim £1088 - 699 as the total interest or is the bad debt declared by some other method? I also notice I had £248 bad debits in the previous tax year, is this a lost cause? Declare the difference but it might be sensible to explain what you have deducted in the notes. You should claim in the year the loss arises, but you can change your tax return (for a couple? of years back) if you didn't do a tax return last year I would contact HMRC to declare the previous years loss. It is best to be consistent over both years. Because you have to add to your taxable interest the recoveries made in this year which relate to losses claimed in previous years. Next year they will give you one figure for recoveries from previous years and you will not be able to apportion it between the two previous years. Not that you can expect much to be recovered.
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Post by pauljoanss on Nov 10, 2020 9:21:56 GMT
Much thanks for the response, all clear now.
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Post by shanghaiscouse on Nov 11, 2020 8:06:55 GMT
Declare the difference but it might be sensible to explain what you have deducted in the notes. You should claim in the year the loss arises, but you can change your tax return (for a couple? of years back) if you didn't do a tax return last year I would contact HMRC to declare the previous years loss. It is best to be consistent over both years. Because you have to add to your taxable interest the recoveries made in this year which relate to losses claimed in previous years. Next year they will give you one figure for recoveries from previous years and you will not be able to apportion it between the two previous years. Not that you can expect much to be recovered.Rather depends on how much you had invested. In the last 2 month they have recovred 3.5k of my bad debts.
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