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Post by Financial Thing on Nov 20, 2015 23:35:17 GMT
I read an article today which showed the after tax returns of P2P. Quite sobering. link
| Advertised interest rate | After 20% (basic) tax rate | After 40% (higher) tax rate |
| | 4% | 3.2% | 2.4% |
| | 8.6% | 6.08% | 3.9% |
| 11.39%
| 8.31% | 2.9% |
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Seems like not being to offset default losses is somewhat hurtful. Not sure if these numbers are accurate, but interesting none the less. |
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jimbob
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Post by jimbob on Nov 20, 2015 23:50:09 GMT
Interesting.
That £1000/£500 tax free interest kicks in from next FY right ?
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Liz
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Post by Liz on Nov 21, 2015 0:42:50 GMT
The article is over 15 months old, but I can't see p2p working for higher rate taxpayers, until will get ISA's.
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james
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Post by james on Nov 21, 2015 2:20:56 GMT
I read an article today which showed the after tax returns of P2P. They wrote that the table they gave is after fees and income tax, not just income tax. Doesn't include bad debt. Even that calculation is wrong because they deducted fees charged to lenders before tax instead of after tax. Also some lenders have restructured their charging as a result, not charging lenders directly any more, instead charging borrowers, which has the effect of moving the fee to before tax basis again. On the 8.6% row they seem to be deducting 1% fee before tax at the basic rate tax level. I can't see how they managed to get 8.6% down to an after 40% tax level of 3.96%. After just the 40% tax it'd be 5.16% and even deducting a 1% fee after tax would take it down to 4.16%, not 3.96%. The 11.39 row also has weird numbers, since deducting 20% tax from that is 9.112%, not 8.31% and deducting 40% income tax is 6.34% not 2.94%. The table seems to be wrong and not even consistently wrong.
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mikes1531
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Post by mikes1531 on Nov 21, 2015 4:26:51 GMT
... I can't see p2p working for higher rate taxpayers, until will get ISA's. Not necessarily. HR taxpayers will just gravitate towards the loans/platforms with the lowest risk and most robust Protection Funds to minimise the impact of the tax treatment of bad debts. And if the promised legislation to allow BD losses against income becomes law, then bad debt will become less of an issue for them.
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pikestaff
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Post by pikestaff on Nov 21, 2015 7:03:50 GMT
p2pmoney's calculator does a somewhat better job, although I would be happier if I could put in bad debt assumptions explicitly rather than as a multiple of what the platforms report. www.p2pmoney.co.uk/compare/lend.htm |
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Post by Financial Thing on Nov 21, 2015 16:46:13 GMT
p2pmoney's calculator does a somewhat better job, although I would be happier if I could put in bad debt assumptions explicitly rather than as a multiple of what the platforms report. www.p2pmoney.co.uk/compare/lend.htmHmm Seemed like I get mostly N/A's here. The numbers that do show up are still very sobering.
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stevio
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Post by stevio on Nov 21, 2015 18:04:26 GMT
p2pmoney's calculator does a somewhat better job, although I would be happier if I could put in bad debt assumptions explicitly rather than as a multiple of what the platforms report. www.p2pmoney.co.uk/compare/lend.htmHmm Seemed like I get mostly N/A's here. The numbers that do show up are still very sobering. If you can get better elsewhere, good luck to you
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