hazellend
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Post by hazellend on Dec 15, 2015 20:48:15 GMT
If you sell an investment on the secondary market is it classed as a capital gain or income?
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ablender
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Post by ablender on Dec 15, 2015 21:05:38 GMT
That buyers are forced to pay for accrued interest that may not ever be paid is stretching the boundaries of reasonableness / fairness. And yet nobody actually is forcing buyers to buy. They're choosing to do it of their own free will. So it could be argued that there's no unfairness involved.
Of course, if they don't understand what they're doing...  I do not think this is the case. It is a trap that many are falling into. I think that this can be argued and I do not think that FS can wiggle itself out completely free as they are not warning buyers of this.
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Post by mrclondon on Dec 15, 2015 21:05:44 GMT
If you sell an investment on the secondary market is it classed as a capital gain or income? If you can convince HMRC that FS loans are "simple debts" then probably neither - see this post earlier in the thread.
FS will not (as things stand today) be reporting any secondary market sales as needing to be notified for either CGT or income tax.
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duck
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Post by duck on Dec 16, 2015 17:04:11 GMT
If you sell an investment on the secondary market is it classed as a capital gain or income? If you can convince HMRC that FS loans are "simple debts" then probably neither - see this post earlier in the thread.
FS will not (as things stand today) be reporting any secondary market sales as needing to be notified for either CGT or income tax.
Exactly. As somebody who has to work hard on my tax position* this can be viewed as 'useful'.
* No, I pay my fair share but I have a non earning partner and a business with cash reserves that I would like to withdraw, so tax planning is a necessity!
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Post by philip84 on Dec 17, 2015 4:51:19 GMT
And yet nobody actually is forcing buyers to buy. They're choosing to do it of their own free will. So it could be argued that there's no unfairness involved.
Of course, if they don't understand what they're doing... I do not think this is the case. It is a trap that many are falling into. I think that this can be argued and I do not think that FS can wiggle itself out completely free as they are not warning buyers of this. "Do not dry your hamster in this microwave!" --> Honestly, if it's someones' free will to invest in P2P lending and to buy the loans as they are offered on the FS SM, then so be it. In my opinion it cannot be FSs job to make sure to protect every- and anyone from their own stupidity. If you don't understand what you're doing, maybe better don't invest in P2P lending... If anyone doesn't like the way the SM is set up, then they're free to not use it or turn to a different platform altogether. No matter how FS set up the SM, someone will end up not being happy with it. Just my two cents...
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ablender
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Post by ablender on Dec 17, 2015 6:28:28 GMT
I do not think this is the case. It is a trap that many are falling into. I think that this can be argued and I do not think that FS can wiggle itself out completely free as they are not warning buyers of this. "Do not dry your hamster in this microwave!" --> Honestly, if it's someones' free will to invest in P2P lending and to buy the loans as they are offered on the FS SM, then so be it. In my opinion it cannot be FSs job to make sure to protect every- and anyone from their own stupidity. If you don't understand what you're doing, maybe better don't invest in P2P lending... If anyone doesn't like the way the SM is set up, then they're free to not use it or turn to a different platform altogether. No matter how FS set up the SM, someone will end up not being happy with it. Just my two cents... This is not a matter of not understanding p2p. Someone might have experience with a number of p2p platforms but not aware of the anomaly with the SM here. That is where the trap is and that is why I say FS is responsible.
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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 Dec 17, 2015 13:20:38 GMT
"Do not dry your hamster in this microwave!" --> Honestly, if it's someones' free will to invest in P2P lending and to buy the loans as they are offered on the FS SM, then so be it. In my opinion it cannot be FSs job to make sure to protect every- and anyone from their own stupidity. If you don't understand what you're doing, maybe better don't invest in P2P lending... If anyone doesn't like the way the SM is set up, then they're free to not use it or turn to a different platform altogether. No matter how FS set up the SM, someone will end up not being happy with it. Just my two cents... I have a great deal of sympathy with these sentiments - I go into things with my eyes open and expect to suffer any consequences if and when it turns out I was unwise. Unfortunately, we live in a world where people get recompensed for their own lack of wisdom or naivety (some might say stupidity - I couldn't possibly comment) on an all too regular basis. If one of our small p2p platforms finds themselves having to make such recompense at the behest of a regulator or similar it could well cause it to falter and we'd all be worse off as a result; it serves all of us if our favoured platforms can be persuaded that they need to avoid that situation where possible.
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r00lish67
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Post by r00lish67 on Dec 17, 2015 13:45:08 GMT
"Do not dry your hamster in this microwave!" --> Honestly, if it's someones' free will to invest in P2P lending and to buy the loans as they are offered on the FS SM, then so be it. In my opinion it cannot be FSs job to make sure to protect every- and anyone from their own stupidity. If you don't understand what you're doing, maybe better don't invest in P2P lending... If anyone doesn't like the way the SM is set up, then they're free to not use it or turn to a different platform altogether. No matter how FS set up the SM, someone will end up not being happy with it. Just my two cents... I have a great deal of sympathy with these sentiments - I go into things with my eyes open and expect to suffer any consequences if and when it turns out I was unwise. Unfortunately, we live in a world where people get recompensed for their own lack of wisdom or naivety (some might say stupidity - I couldn't possibly comment) on an all too regular basis. If one of our small p2p platforms finds themselves having to make such recompense at the behest of a regulator or similar it could well cause it to falter and we'd all be worse off as a result; it serves all of us if our favoured platforms can be persuaded that they need to avoid that situation where possible. Absolutely agree with this. Whilst this situation remains, I see FS as exposed to a risk of being accused of landing some investors with unexpected tax liabilities, but also as potentially providing a tax haven for those more informed investors who choose to offload their investments near to maturity. Also, have to respectfully disagree with the 'hamster/microwave' comparision in this case (although agree with the general sentiment!) - I still see this current structure as largely counter-intuitive even to individuals with experience of P2P, and further it is still not referenced on their secondary market page (although acknowledge the recent email comms is a start).
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littleoldlady
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Running down all platforms due to age
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Post by littleoldlady on Dec 17, 2015 16:47:29 GMT
Banks have had to pay compensation on several issues where IMO they were less at fault than FS are in this case. Supposedly people had PPI and did not know, despite paying for it every month. That's just one example.
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Post by mrclondon on Dec 18, 2015 11:01:05 GMT
One more thing to bear in mind before making a purchase on the SM - the effect of early redemptions . My finger was poised yesterday to buy (at par) a loan part with 90 days until maturity to sell on as 30 days approached. Then sanity prevailed - if I had done so, and the loan had redeemed early I would have been left with the tax liability of the purchasd accrued interest.
Conclusion - there are no circumstances where I'll buy a part at par (or a premium).
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SteveT
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Post by SteveT on Dec 18, 2015 11:09:22 GMT
One more thing to bear in mind before making a purchase on the SM - the effect of early redemptions . My finger was poised yesterday to buy (at par) a loan part with 90 days until maturity to sell on as 30 days approached. Then sanity prevailed - if I had done so, and the loan had redeemed early I would have been left with the tax liability of the purchasd accrued interest. Conclusion - there are no circumstances where I'll buy a part at par (or a premium). I completely agree. As things stand, the FS secondary market is a "selling only" proposition for me. Every advantage lies with the seller.
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ben
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Post by ben on Dec 18, 2015 11:33:31 GMT
One more thing to bear in mind before making a purchase on the SM - the effect of early redemptions . My finger was poised yesterday to buy (at par) a loan part with 90 days until maturity to sell on as 30 days approached. Then sanity prevailed - if I had done so, and the loan had redeemed early I would have been left with the tax liability of the purchasd accrued interest. Conclusion - there are no circumstances where I'll buy a part at par (or a premium). I completely agree. As things stand, the FS secondary market is a "selling only" proposition for me. Every advantage lies with the seller True could be pretty nasty if you got one that had gone half way through the loan so you had to pay the interest up to then and then they repaid the loan the next day could end up losing quite a bit
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SteveT
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Post by SteveT on Dec 18, 2015 12:13:33 GMT
fundingsecure , on the "Secondary market - history" page, could you please turn the loan reference numbers (in each SM sale entry) into a live link to the loan, as is the case elsewhere on the site. That way we can work out what has sold without having to write down a reference number and then go look it up. Thanks. , could you also please add a column in the "Secondary Market - History" page to indicate the Premium / Discount at which the loan trade was executed? At the moment, especially as the loan reference numbers don't web-link to the loans, it's an awkward process trying to backwards-engineer what the sale premium must have been from the Price, the capital Amount (which are shown on the SM - History page), the interest rate and the remaining term (which are not, and so must be looked up via the "All Past Loans" page). Thanks.
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LittleBear
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Post by LittleBear on Dec 18, 2015 17:24:43 GMT
True could be pretty nasty if you got one that had gone half way through the loan so you had to pay the interest up to then and then they repaid the loan the next day could end up losing quite a bit I've just been caught out like that  As a non-tax-payer, I wasn't worried about paying a slight premium for a loan with some time left to run. I was happy with the indicated AER, so went ahead and purchased. I'd only accrued interest for a few days when it repaid early and I lost money. Fortunately, I am only using small sums in FS compared to other platforms, but that's not the point. fundingsecure, why couldn't you have implemented a Secondary Market like Saving Stream or Money Thing? With all the feedback you've been given here, it is disappointing that you have neither made big improvements nor justified why you consider your way better. As other forumites have said, it is a waste of time (and in this case, money as well) purchasing on the SM with the current set-up. Very disappointing.
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ben
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Post by ben on Dec 18, 2015 17:45:31 GMT
True could be pretty nasty if you got one that had gone half way through the loan so you had to pay the interest up to then and then they repaid the loan the next day could end up losing quite a bit I've just been caught out like that As a non-tax-payer, I wasn't worried about paying a slight premium for a loan with some time left to run. I was happy with the indicated AER, so went ahead and purchased. I'd only accrued interest for a few days when it repaid early and I lost money. Fortunately, I am only using small sums in FS compared to other platforms, but that's not the point. fundingsecure , why couldn't you have implemented a Secondary Market like Saving Stream or Money Thing? With all the feedback you've been given here, it is disappointing that you have neither made big improvements nor justified why you consider your way better. As other forumites have said, it is a waste of time (and in this case, money as well) purchasing on the SM with the current set-up. Very disappointing. Ouch sorry to hear that , at least you did not lose to much, with the way the loans works the secondary market can only benefit seller, all it appears to have done is got people to buy everything in hope to sell it on later, last few loans have gone far quicker then any others have done
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