ramblin rose
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“Some people grumble that roses have thorns; I am grateful that thorns have roses.” — Alphonse Karr
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Post by ramblin rose on Feb 18, 2015 18:30:07 GMT
Not forgetting, however, that many people round here pay little or no tax, for example getting much of their income in the form of dividends. EIS does potentially benefit those people in the form of capital gains write-off if that applies though. Is the capital gains relief available to everyone? I've had capital gains over the years, but never enough to exceed my CG allowance so I haven't paid CGT. Do I have to have paid some CGT in order to get CGT relief on an EIS investment that becomes worthless? Usual caveats about me not being a tax expert apply, but I did spend a lot of time getting to grips with SEIS and EIS for the tax form I most recently completed around Christmas time and I can even remember some of it! I'm not referring to my notes here, so some of this may be slightly off, but the gist is right. The HMRC scribbles about this are very helpful actually: www.gov.uk/government/publications/the-enterprise-investment-scheme-introduction/enterprise-investment-scheme and I'd advise reading them because what I'm saying is applicable to my circumstances and might not be to other peoples'. Any CGT owing for the year in which the investment was made can be fully or partially wiped out by 50% of the value of your EIS qualifying investment. It can be carried back to the previous year's tax in order to deal with any CGT already paid for that year instead. You have to declare your investment and make a claim for the income tax reduction EVEN IF YOU DON'T HAVE TO PAY ANY INCOME TAX and therefore won't benefit from it. This is because, only if you've made that claim will you go on to benefit from not having to pay CGT on any gains you make in the future from the investment. There is a mimumum term you have to keep the investment, which I think is 3 years, but I may have misremembered that - Christmas was ages ago, and I've got it written down, so why would I remember?  Edit: I see someone has confirmed it as 3 years above. Further EDIT: I also had it confirmed by someone in the tax office that if you carry back your claim to the previous tax year, then it is treated as having been made in that tax year. My understanding of that is that it would thus reduce the time you have to hold it by up to a year, but I've not had to put that to the test, and it's not a likely issue in most cases I'd have thought - most EIS investments don't instigate their exit strategies until the requisite time period is up for that very reason. Obviously there'll be unusual circumstances here and there and if they apply, then you'll have to look into it.
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max
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Post by max on Feb 18, 2015 18:48:15 GMT
I have a very positive view on the potential for growth of AC and its current position in the P2P lending.
However, I believe we should all be careful that this convertible offer does not become a bit of a blank cheque.
I did some search on duedil and I now understand AC already uses a number of different classes of shares (A to H) for a range of different reasons. Different classes of shares come with quite different rights to vote and to participate to profit/losses generated by the company and its subsidiaries.
I would welcome some clarification on two simple points from AC or anyone who has a clue:
1) Which of the A-H shares will be issued for this convertible at the date of conversion?
2) The forthcoming institutional equity raise will target the same class of shares as the present convertible?
Sorry if I'm increasing confusion, but I feel this point might be relevant.
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bugs4me
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Post by bugs4me on Feb 18, 2015 18:52:40 GMT
I emailed Mark Wardrop directly (he's probably not going to like me mentioning that when he gets bombarded with emails ...). They seem to preparing the NDA for an email drop tonight. Does this mean that AC didn't anticipate that potential investors might like to see their business plan and financial projections before investing? If they had, they'd have prepared the NDA before the Seedrs campaign started. I am not impressed!  I'll let you know when my NDA drops in. I'm surprised that Seedrs or maybe AC would expect any investment prior to people having sight of these financial documents. Certainly no loan on the AC platform would take off without this information - surely this is no different.
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Post by chris on Feb 18, 2015 19:00:00 GMT
Have passed this on to marketing to approve. : I am similarly irritated, as the banner seems more often than not to obscure the buttons I need to click, such as the 'Apply' button used to change my investment targets. Marketing has approved the change, it'll be made tomorrow morning. There'll be a cross which will permanently banish the banner.
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ramblin rose
Member of DD Central
“Some people grumble that roses have thorns; I am grateful that thorns have roses.” — Alphonse Karr
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Post by ramblin rose on Feb 18, 2015 19:00:18 GMT
Does this mean that AC didn't anticipate that potential investors might like to see their business plan and financial projections before investing? If they had, they'd have prepared the NDA before the Seedrs campaign started. I am not impressed! I'll let you know when my NDA drops in. I'm surprised that Seedrs or maybe AC would expect any investment prior to people having sight of these financial documents. Certainly no loan on the AC platform would take off without this information - surely this is no different. Given the number of investments already made, apparently it is 
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bugs4me
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Post by bugs4me on Feb 18, 2015 19:02:38 GMT
I'll let you know when my NDA drops in. I'm surprised that Seedrs or maybe AC would expect any investment prior to people having sight of these financial documents. Certainly no loan on the AC platform would take off without this information - surely this is no different. Given the number of investments already made, apparently it is I'd bet any institutional investor wouldn't move a penny without this information. But then I'm not an............
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mikes1531
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Post by mikes1531 on Feb 18, 2015 19:39:28 GMT
Usual caveats about me not being a tax expert apply... Any CGT owing for the year in which the investment was made can be fully or partially wiped out by 50% of the value of your EIS qualifying investment. : Thanks for the link. It is indeed a useful document. I've taken a quick look through it, and saved it for future study and reference. With respect to loss relief, I didn't come across anything with respect to CGT relief other than a statement that the investor could elect to offset the loss against income rather than CG. But that's exactly what I was looking for, and needing, since I'd expect to continue to have relatively small CGs that don't incur CGT. The one thing I suspect is incorrect in the statement above is the year to which the relief applies, as I expect it's supposed to be the year of disposal rather than the year of investment. PS. I suppose I should have prefaced this comment with a disclaimer about my lack of qualifications for anything to do with taxes, accounting, or anything else.
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Post by solicitorious on Feb 18, 2015 19:41:20 GMT
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sqh
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Before P2P, savers put a guinea in a piggy bank, now they smash the banks to become guinea pigs.
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Post by sqh on Feb 18, 2015 19:52:05 GMT
@ mikes1531Losses [less initial income tax relief] are offsettable against income tax, as well as cgt. Yes you have to hold them for at least 3 years. Your losses would be limited to 56% as a basic rate taxpayer, or 42% as a 40% taxpayer, assuming of course you have sufficient tax liability to utilize. Worked example: You invest £1000 You get £300 pounds tax relief against your current years tax bill (or the previous, or split between the two in whatever proportion you wish). We have been told categorically now that share certificates will be issued post April 6 2015, so the years you have to play with are 2015/16 and 2014/15. Obviously you need at least £300 of tax liability to make use of the relief. Worst case scenario. You hold them for 3 years and they are valueless. Worth £0. In that tax year you can offset the loss (less initial relief) against your income. Loss = £1000, less the initial £300 relief is £700. This £700 loss can be offset against taxable income, giving a benefit of £700*20% = £140 for a basic rate payer, or £700*40% = £280 for a higher rate payer. Again you would obviously need to have £700 of taxable income to benefit fully. So for a basic rate payer the total loss of the investment has been mitigated by £300+£140=£440, leaving a 56% loss, and for a higher rate payer by £300+£280=£580, leaving a 42% loss on the initial £1000 investment. [Disclaimer: I am not an accountant. DYOR] Well explained. For a short video confirmation try www.investing-works.com/
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Post by stuartassetzcapital on Feb 18, 2015 20:02:27 GMT
Hi everybody We will be replying to each and every query by tomorrow so should keep us busy. We were just updating the business plan and forecasts to reflect further recent (and good) events (soon to be disclosed) and also condensing it for purposes of disclosure as we've had quite a lot of interest from some people looking for a quick business plan and forecasts to copy  - 300% growth in a year is quite investable. Seriously though lots of data to back up the fund raise is coming through here on this forum and on the Seedrs Q&A shortly and we will be as open as we can be bearing in mind the world is watching. I did see someone with an interest pop up in Germany today who thinks we are an interesting takeover target (except that would need to agree which we aren't as our inevstors need a nice growth first) ; crowdstreet.de/2015/02/18/was-sollte-rocket-internet-mit-den-600-millionen-euro-tun-einen-p2p-marktplatz-im-uk-kaufen/ - sorry its in German but Google translate is quite helpful. Gives you an idea where other people think this may be heading in the future. Stuart |
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mikes1531
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Post by mikes1531 on Feb 18, 2015 20:09:23 GMT
I'm surprised that Seedrs or maybe AC would expect any investment prior to people having sight of these financial documents. Certainly no loan on the AC platform would take off without this information - surely this is no different. Given the number of investments already made, apparently it is I think the critical factor here is that the 'investments' being made now are not binding. A good analogy, I think, would be pre-bids in the old AC system. You made those to reserve a place in the offering before the real auction went live, and might have done that before all the info was available. If you didn't like what you saw when the info finally came out and the auction still hadn't started, you cancelled those pre-bids without penalty. This seems to be quite similar. Until the fundraising reaches its target, an investor can cancel their 'pledge' without penalty. It isn't clear to me exactly what happens when the target is reached. Pledges become somewhat more binding at that point but I don't know whether investors are notified that that point is imminent and it becomes 'last call' for cancellations, or whether it just happens without advance notice being given. But perhaps it doesn't matter, as pledges don't appear really to be binding until they are funded. If they're not funded then they seem to lapse, and I came across no mention of any impact on investors if they do not come up with the funds -- other than the obvious effect that they won't get any shares. If I were the company trying to raise the funding, I would be worried that a seemingly successful campaign could fall apart at the last minute if a lot of pledges are not followed with funding, but perhaps that just doesn't happen at Seedrs. Perhaps that's why the 'Overfunding' phase exists.
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mikes1531
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Post by mikes1531 on Feb 18, 2015 20:56:04 GMT
I know that salesmen can be "economical" with the truth but come on............................. It's making me have second thoughts about AC in general just with that one answer. I have a similar issue with that same answer to the Seedrs question about defaulted loans, where stuartassetzcapital mentioned just four "'hard defaults’ where the situation is serious enough to warrant intervention. ... We have had only 4 cases where Assetz Capital has had to enact a collections procedure. They are:"- A contracting business owing £104,000 where payments due under a contract in the next 6 months are protected by a charge on that contract and lenders will be repaid in full.
- A furniture retailer who borrowed £700,000.
- A property loan for £1.9m where a sale of the property has not happened and the borrower has not been co-operative. The LTV is below 70% and a sale of the property will result in full repayment of capital and interest for our lenders.
- Our most recent default was a business that borrowed £780,000 lost a major contract and cash flow has been squeezed.
IMHO, the most significant omission is the £1.96M loan that's tied to the third loan listed above. There are a number of other cases where the situation is serious enough that AC have suspended Aftermarket sales, and have asked lenders to vote whether to appoint receivers. I haven't looked at those in detail, but ISTM that in some of those the appointment of a receiver is imminent even if it hasn't happened quite yet. And even where lenders have voted to give the borrower a bit more time to correct the situation, I would have thought those 'non-performing' loans were deserving of more mention in response to the question than they received.
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Post by Come_on_Grandad on Feb 18, 2015 21:40:22 GMT
Is the capital gains relief available to everyone? I've had capital gains over the years, but never enough to exceed my CG allowance so I haven't paid CGT. Do I have to have paid some CGT in order to get CGT relief on an EIS investment that becomes worthless? Usual caveats about me not being a tax expert apply, but I did spend a lot of time getting to grips with SEIS and EIS for the tax form I most recently completed around Christmas time and I can even remember some of it! I'm not referring to my notes here, so some of this may be slightly off, but the gist is right. The HMRC scribbles about this are very helpful actually: www.gov.uk/government/publications/the-enterprise-investment-scheme-introduction/enterprise-investment-scheme and I'd advise reading them because what I'm saying is applicable to my circumstances and might not be to other peoples'. Any CGT owing for the year in which the investment was made can be fully or partially wiped out by 50% of the value of your EIS qualifying investment. It can be carried back to the previous year's tax in order to deal with any CGT already paid for that year instead. You have to declare your investment and make a claim for the income tax reduction EVEN IF YOU DON'T HAVE TO PAY ANY INCOME TAX and therefore won't benefit from it. This is because, only if you've made that claim will you go on to benefit from not having to pay CGT on any gains you make in the future from the investment. There is a mimumum term you have to keep the investment, which I think is 3 years, but I may have misremembered that - Christmas was ages ago, and I've got it written down, so why would I remember? Edit: I see someone has confirmed it as 3 years above. Further EDIT: I also had it confirmed by someone in the tax office that if you carry back your claim to the previous tax year, then it is treated as having been made in that tax year. My understanding of that is that it would thus reduce the time you have to hold it by up to a year, but I've not had to put that to the test, and it's not a likely issue in most cases I'd have thought - most EIS investments don't instigate their exit strategies until the requisite time period is up for that very reason. Obviously there'll be unusual circumstances here and there and if they apply, then you'll have to look into it. I should start by saying that I have zero previous expertise. However we are motivated to learn about SEIS/EIS because we are going to realise a capital gain in 2015/6 which will comfortably exceed our allowances. I think Rose that, in amongst what you have said above, you have described Reinvestment Relief which is an SEIS benefit and failed to mention Deferral Relief which an EIS benefit. Both SEIS and EIS also have Disposal Relief. I believe (but would like to be corrected if wrong) that these CGT benefits are in addition to the Income Tax offsetting which others have described. In particular, for this AC EIS investment, it seems to me that if a 40% taxpayer can use all available reliefs then the downside on a total loss could be 14% of the EIS investment, because we would be deferring the capital gain (at 28% in 2015/16) to a future year where it can be set against that year's allowance. Again, would like to be corrected if I am wrong. Edit to link to the companion document to the one that Rose has provided www.gov.uk/government/publications/seed-enterprise-investment-scheme-income-tax-and-capital-gains-tax-reliefs-hs393-self-assessment-helpsheet
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ramblin rose
Member of DD Central
“Some people grumble that roses have thorns; I am grateful that thorns have roses.” — Alphonse Karr
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Post by ramblin rose on Feb 18, 2015 21:41:48 GMT
Usual caveats about me not being a tax expert apply... Any CGT owing for the year in which the investment was made can be fully or partially wiped out by 50% of the value of your EIS qualifying investment. : Thanks for the link. It is indeed a useful document. I've taken a quick look through it, and saved it for future study and reference. With respect to loss relief, I didn't come across anything with respect to CGT relief other than a statement that the investor could elect to offset the loss against income rather than CG. But that's exactly what I was looking for, and needing, since I'd expect to continue to have relatively small CGs that don't incur CGT. The one thing I suspect is incorrect in the statement above is the year to which the relief applies, as I expect it's supposed to be the year of disposal rather than the year of investment. PS. I suppose I should have prefaced this comment with a disclaimer about my lack of qualifications for anything to do with taxes, accounting, or anything else. Two types of cgt reliefs mike . The investment itself attracts relief in its own year at 50% of it's value, then there's the fact you don't pay it on the profits at disposal provided you've made the claim for income tax relief. See previous post looks like I've muddled the relief applying to the year of investment. Sorry for confusion caused there. Bottom line: for tax payers of any sort the EIS scheme is a great benefit.
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ramblin rose
Member of DD Central
“Some people grumble that roses have thorns; I am grateful that thorns have roses.” — Alphonse Karr
Posts: 1,370
Likes: 857
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Post by ramblin rose on Feb 18, 2015 21:44:54 GMT
Usual caveats about me not being a tax expert apply, but I did spend a lot of time getting to grips with SEIS and EIS for the tax form I most recently completed around Christmas time and I can even remember some of it! I'm not referring to my notes here, so some of this may be slightly off, but the gist is right. The HMRC scribbles about this are very helpful actually: www.gov.uk/government/publications/the-enterprise-investment-scheme-introduction/enterprise-investment-scheme and I'd advise reading them because what I'm saying is applicable to my circumstances and might not be to other peoples'. Any CGT owing for the year in which the investment was made can be fully or partially wiped out by 50% of the value of your EIS qualifying investment. It can be carried back to the previous year's tax in order to deal with any CGT already paid for that year instead. You have to declare your investment and make a claim for the income tax reduction EVEN IF YOU DON'T HAVE TO PAY ANY INCOME TAX and therefore won't benefit from it. This is because, only if you've made that claim will you go on to benefit from not having to pay CGT on any gains you make in the future from the investment. There is a mimumum term you have to keep the investment, which I think is 3 years, but I may have misremembered that - Christmas was ages ago, and I've got it written down, so why would I remember? Edit: I see someone has confirmed it as 3 years above. Further EDIT: I also had it confirmed by someone in the tax office that if you carry back your claim to the previous tax year, then it is treated as having been made in that tax year. My understanding of that is that it would thus reduce the time you have to hold it by up to a year, but I've not had to put that to the test, and it's not a likely issue in most cases I'd have thought - most EIS investments don't instigate their exit strategies until the requisite time period is up for that very reason. Obviously there'll be unusual circumstances here and there and if they apply, then you'll have to look into it. I should start by saying that I have zero previous expertise. However we are motivated to learn about SEIS/EIS because we are going to realise a capital gain in 2015/6 which will comfortably exceed our allowances. I think Rose that, in amongst what you have said above, you have described Reinvestment Relief which is an SEIS benefit and failed to mention Deferral Relief which an EIS benefit. Both SEIS and EIS also have Disposal Relief. I believe (but would like to be corrected if wrong) that these CGT benefits are in addition to the Income Tax offsetting which others have described. In particular, for this AC EIS investment, it seems to me that if a 40% taxpayer can use all available reliefs then the downside on a total loss could be 14% of the EIS investment, because we would be deferring the capital gain (at 28% in 2015/16) to a future year where it can be set against that year's allowance. Again, would like to be corrected if I am wrong. You're undoubtedly right about those reliefs - I was dealing with both at the same time, so my memory will have muddled them for sure.
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Edit: I see someone has confirmed it as 3 years above.
- 300% growth in a year is quite investable. 
