P2P ISA

Well pikestaff, I don't have a SIPP but I do have a SSAS pension, and no valuation required for a SSAS - I am the scheme admin and make the decisions.

[SIPP is FCA regulated, SSAS is TPR regulated, but both must meet HMRC rules].

I transferred several existing pensions out, into the SSAS bank account.

I then, separately, opened a SSAS p2p account, paid into it from the SSAS bank account and bought (qualifying) loan parts.

So nothing P2P related transferred, just loan parts purchased from inside the SSAS.

Perhaps for existing S&S ISAs, similar staging might help - transfer out into cash by the S&S ISA provider who transfers the cash into p2p, and then loan parts purchased.

I guess that way, both cash and S&S P2P ISA transfers could just be seen as incoming ISA funds at the P2P end - or is that too simplistic? 

Vero
AFAICS the first of your two posts above describes cash going into your SSAS which then buys loan parts (either on PM or SM). There's no need for a valuation there.

My understanding is that HMRC would require a valuation for any off market transfer of an existing loan part that is not at market value, so an off market transfer at par (as you describe in your 2nd post) would be objectionable. That is also the view taken by TC. Their guide to using a pension fund, which sqh mentioend in an earlier post, is on the public part of their website here: www.thincats.com/Apps/WebObjects/thincats-pfp.woa/pfp/id/4494/rolbacpfp-std/14624/Guide-to-using-a-pension-fund.pdf

According to the guide there are two ways to transfer an existing portfolio:

(1) sell on the SM, contribute the cash to your pension and use the cash to buy inside the pension. This is not really a transfer at all (and even if you put the cash in first there are issues, as I've already noted); or

(2) use TC's valuation service to transfer your existing TC loan parts at a valuation. The cost of this is "£500 regardless of the size of the portfolio" (which must be what I was half remembering before). The guide says that a valuation is needed because "It’s necessary to demonstrate to HMRC that your loans have been purchased at a genuinely commercial rate. If HMRC believes they have either been bought too cheaply or too expensively, your pension could face a penalty charge."

I suspect that more "mass market" platforms would be able to do this more cheaply but it is never going to be free. And if HMRC imposed a similar requirement for transfers of existing loan parts into an ISA it would price a lot of smaller investors out of doing it.

sqh I agree that HMRC is likely to accept a transaction effected through the SM. My main point is that you may not be able to actually do it. It can be done on TC (if you are prepared to be the high bidder, potentially wasting some of your allowance, and pay TC's high SM fees) but it can't at present be done on AC because most sales are split between multiple buyers.

It's quite different from "bed and ISA" or "bed and SIPP" transactions in quoted shares, where there is a liquid market.

Also you can't use the SM at all for loans that are ineligible for sale.  Having said that, lenders may prefer to keep their ineligible loans in a taxable environment if deductible losses are foreseen (which will depend in large part on whether the proposals in the Autunm Statement come to fruition).

Thanks pikestaff, I don't deal with TC.

I did read their pension guide a long time ago, but they do not meet my requirements.

(section 8 on transfer/valuation was a recent addition)

The approved p2p provider that I use for my SSAS *only* sells at par, and therefore par is the one and only market value.

(I originally included "at par" only for completeness; I did not mean to construe that there was any option other than par - sorry, I did not make this clear).

 

The off-market sale and purchase was pre-approved;  with the SSAS I am responsible for the decisions but I stick strictly to the law, which says I must get approval first, and my SSAS practitioner is very strict.  Other providers were vetoed fullstop, and there were very few loans at my current p2p provider in 2014 that I wanted, could access, and that were also deemed pension (HMRC) acceptable - each gone through with a fine tooth comb. 

I hope I have explained that better this time! It's a combination of slightly complex and extremely boring... so I'll leave it there.

  Thanks for all your answers. I think I'll wait until the full details of the P2P ISA's are announced, although it's tempting to get £500 per month in SS (before tax and without the FSCS). At the moment I'm getting under £1000 per year and am having to change providers annually.

    Hopefully they won't end up as a seperate P2P ISA product offering a lower rate subsidised by the tax free status.

  Regards,
   Tim. 

I don't think it has been possible historically to transfer existing investments into tax wrappers, so a P2P ISA may only apply to new loans, from the biggest platforms only.