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Post by cassiopeia on Jun 18, 2015 21:12:07 GMT
For those who don't pay income tax, for whose income is less than £10,600 (for 2015/16) or slightly more for older people, you can now theoretically earn an extra £5,000 of savings interest tax free. Of course you are unlikely to earn £5000 through standard savings accounts unless you have a very large balance. However if P2P counts as savings this could be easily achieved. Has anyone questioned the revenue on this, or submitted a return counting P2P as savings income? |
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james
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Post by james on Jun 18, 2015 21:41:27 GMT
P2P interest is savings. It counts for both that £5k and the new next year £1k/£500/0 depending on income tax rate. I've filed three tax returns with foreign P2P interest, most recently in the thousands range, and some by phone before that.
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Post by cassiopeia on Jun 19, 2015 7:47:06 GMT
Together with the news rules which allow P2P capital losses to be offset against income, this market should be far more attractive for savers and investors.
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rogerbu
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Post by rogerbu on Jun 19, 2015 10:35:01 GMT
Together with the news rules which allow P2P capital losses to be offset against income, this market should be far more attractive for savers and investors. Correct - For Non Tax Payers or Non tax paying spouses, P2P is very attractive. However be careful not to let the Tax tail wag the balanced asset mix dog  As above. My tax returns including P2P interest have been accepted by HMRC. At least one P2P has commented that HMRC is demanding files of interest paid etc. So make sure that you are correctly recording your P2P income. It is my understanding that you should record the Gross Income - ie Interest before a P2P's fees.
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coop
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Post by coop on Jun 19, 2015 11:36:25 GMT
Interesting reading, thank you! I have to give credit where it's due and say GO had a few nifty things in the budget this time around which I think are big steps in the right direction towards providing support for people attempting to save money/act fiscally responsible. I'm usually pretty anti-Tory and I'm still not keen on GO and think he's an entitled sanctimonious nerk but I also live in the real world and I have to give credit where it's due and say GO had a few nifty things in the budget (e.g. this and the new Help to Buy ISA) this time around which I think are big steps in the right direction towards providing support for people attempting to save money/act fiscally responsible. Still don't think I'd have a pint with him though! (Where's Nige???  ) |
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alison
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Sanctuary!!
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Post by alison on Jun 19, 2015 12:48:49 GMT
.... I have to give credit where it's due and say GO had a few nifty things in the budget (e.g. this and the new Help to Buy ISA) this time around which I think are big steps in the right direction towards providing support for people attempting to save money/act fiscally responsible. Still don't think I'd have a pint with him though! (Where's Nige??? ) You still on about Nigella's dad?!!
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andy2001
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Post by andy2001 on Jul 7, 2015 0:40:07 GMT
If not resident in the UK, interest from bank savings is free from UK tax as long as a form is filled out. Is P2P lending also free from UK tax for non UK residents?
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james
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Post by james on Jul 7, 2015 4:27:00 GMT
I assume that the form you're referring to is an R85, which tells a savings institution that they should pay interest gross, without deducting 20% for basic rate income tax, because you are not going to be liable to pay tax on any of the money. P2P already pays interest without deducting 20% for basic rate tax so no form is needed.
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Mike
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Post by Mike on Jul 7, 2015 4:57:08 GMT
I assume that the form you're referring to is an R85, which tells a savings institution that they should pay interest gross, without deducting 20% for basic rate income tax, because you are not going to be liable to pay tax on any of the money. P2P already pays interest without deducting 20% for basic rate tax so no form is needed. Although you may still be asked to do a self-assessment... As I have been every single year since I left the UK...
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andy2001
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Post by andy2001 on Jul 7, 2015 5:01:09 GMT
I assume that the form you're referring to is an R85, which tells a savings institution that they should pay interest gross, without deducting 20% for basic rate income tax, because you are not going to be liable to pay tax on any of the money. P2P already pays interest without deducting 20% for basic rate tax so no form is needed. This is correct. All P2P that I know of is paid gross, But there can still be a tax to pay. I want to be clear if there would be a liability to pay UK tax if not resident in the UK. If P2P is treated the same for tax in all respects as savings it would seem not.
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Mike
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Post by Mike on Jul 7, 2015 5:10:31 GMT
My understanding is you need to fill out Form R43 in order to claim your personal allowance In EDIT: I think I have misunderstood your point... My apologies |
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arbster
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Post by arbster on Jul 7, 2015 6:53:38 GMT
At least one P2P has commented that HMRC is demanding files of interest paid etc. So make sure that you are correctly recording your P2P income. It is my understanding that you should record the Gross Income - ie Interest before a P2P's fees. Just as a note on this, I got this response from FC on the tax treatment of fees: Recently, HMRC have clarified that investors are obliged to pay tax on their gross income, which for the 14/15 tax year means inclusive of fees (meaning the gross figure on your tax statement). Following this recent clarification, HMRC have agreed that from April 2015 the Funding Circle lender fee will become a 'loan servicing fee', which can be deducted prior to taking a gross figure for investors to declare on their tax returns. To summarise: for the tax year 14/15 we understand that you should put the total income before fees, from 15/16 you should use the figure after fees. I have also included a link on our recent blog post on the subject of tax, following the budget announcement: www.fundingcircle.com/blog/2015/04/talking-tax/
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pikestaff
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Post by pikestaff on Jul 7, 2015 9:23:09 GMT
I assume that the form you're referring to is an R85, which tells a savings institution that they should pay interest gross, without deducting 20% for basic rate income tax, because you are not going to be liable to pay tax on any of the money. P2P already pays interest without deducting 20% for basic rate tax so no form is needed. This is correct. All P2P that I know of is paid gross, But there can still be a tax to pay. I want to be clear if there would be a liability to pay UK tax if not resident in the UK. If P2P is treated the same for tax in all respects as savings it would seem not. It is a different form for overseas residents (R105). The basic rule on the taxation of UK interest for non-residents is that your UK tax liability is limited to the tax deducted at source. See here: www.gov.uk/government/uploads/system/uploads/attachment_data/file/323719/hs300.pdfIt would therefore appear that, because no tax is deducted at source on P2P interest, there is no UK tax liability for non-residents. If the law was changed to require tax to be deducted at source there would be a UK tax liability unless it was possible to avoid the deduction. This could not currently be done through the R105 form because it applies to deposit interest only. Whether or not the government chose to amend the R105 to include P2P might depend on how badly they needed the money!
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rogerbu
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Post by rogerbu on Jul 7, 2015 9:23:41 GMT
It has missed me completely that from 2015 tax year we would be declaring the Net (of fees) income instead of the Gross (of fees) income for FC - great  . I wonder whether other platforms that charge fees have also adapted the fees structure? I notice in FC blog that they have pre-announced tomorrow's budget - Additionally the Treasury has confirmed that you will be able to use your ISA to lend through Funding Circle by April 6th 2016. |
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rogerbu
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Post by rogerbu on Jul 7, 2015 15:25:25 GMT
At least one P2P has commented that HMRC is demanding files of interest paid etc. So make sure that you are correctly recording your P2P income. It is my understanding that you should record the Gross Income - ie Interest before a P2P's fees. Just as a note on this, I got this response from FC on the tax treatment of fees: Recently, HMRC have clarified that investors are obliged to pay tax on their gross income, which for the 14/15 tax year means inclusive of fees (meaning the gross figure on your tax statement). Following this recent clarification, HMRC have agreed that from April 2015 the Funding Circle lender fee will become a 'loan servicing fee', which can be deducted prior to taking a gross figure for investors to declare on their tax returns. To summarise: for the tax year 14/15 we understand that you should put the total income before fees, from 15/16 you should use the figure after fees. I have also included a link on our recent blog post on the subject of tax, following the budget announcement: www.fundingcircle.com/blog/2015/04/talking-tax/I have questioned Money&Co. They confirm that for 2015/16 et al. Investors should declare Gross (before fees) interest. Their reply. 'We cannot provide tax advice, but our advisers have informed us that lenders should declare the gross interest before fee deductions to the HMRC. We are looking at ways of making this more tax efficient for lenders.'
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