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Post by blanik on Mar 2, 2016 10:22:44 GMT
Anyone thinking of recycling their existing loan book into a Zopa Plus may have a bit of work to do!
From the Zopa e-mail
"If you wish to move your existing loans from Zopa Classic into one of the other new products, you can choose to either sell your loans and purchase new ones within a new product, or turn off re-lending and allow repayments to collect within the holding account and then allocate those funds to a new product. This will be a manual process at launch but we will look to automate it in the coming months."
Couple of issues -
The minimum investment in Zopa Plus is £1,000. So you will have to accumulate this amount in your holding account before being able to open a Zopa Plus
If you have both a Zopa Plus and a Zopa Classic, if you turn re-lending on Zopa have confirmed that "Any repayments would be allocated back to the product from which they originated. For example any repayments for Zopa classic would be re-lent in Zopa classic.". This is different to the current process where all the re-lending money goes to the default product - currently either shorter or longer.
So to transfer out of the Classic you would need to keep re-lending off, and manually offer the money in the holding account to Plus, until either the Classic loan book is run down or Zopa automate the process "in the coming months." ( even if they do that I suspect the £1,000 minimum issue will remain ).
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wapping35
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Post by wapping35 on Mar 2, 2016 16:51:30 GMT
Anyone thinking of recycling their existing loan book into a Zopa Plus may have a bit of work to do!
===========
My understanding is yes the issue you mention is a problem with Zopa plus. I have been in touch with them directly about it.
I understand until they improve the IT reinvestment options (which they say they will aim to do shortly after launch, meaning 2 months "ish") is we have to grin and bear it, if we wish to re-invest repayments into Zopa Plus.
A partial work around (if you have the cash flow), is to deposit new money in a lump sum (which also gets you to meet the £1k limit immediately) and then turn ATU off and withdraw the repayments to get the lump sum back. That prevents needing to manually reinvest repayments daily and trying to time your log in to when Z have run the repayments. Which at the moment is a bit of a lottery, with the repayment run problems we have seen.
Far from perfect but it is the strategy I will be using until they improve the IT infrastructure.
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Post by propman on Mar 3, 2016 8:28:05 GMT
Anyone thinking of recycling their existing loan book into a Zopa Plus may have a bit of work to do! From the Zopa e-mail The minimum investment in Zopa Plus is £1,000. So you will have to accumulate this amount in your holding account before being able to open a Zopa Plus" Thanks, I had missed that. I agree with Wapping as the sensible approach for anyone without a £30k+ existing loanbook. I hope that this approach to deter the small lenders from the new product will mean that they are slightly less interfering to protect investors from themselves. This should make it much less likely that there will be investors screaming of losses purely because they didn't diversify much and were unlucky as well as people with tiny savings who cannot afford to invest in a risky product.
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momac
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Post by momac on Mar 3, 2016 17:54:39 GMT
Thanks Blanik, Wapping and Propman for the above - helpful.
We will still be trusting Zopa to get the spread of loans correct to deliver the 6.5% on Plus....
Now, if they had only included the option to let us choose the rate at which we lend (or borrower categories) wouldn't that have been perfect!?
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Greenwood2
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Post by Greenwood2 on Mar 14, 2016 7:12:14 GMT
What they used to call the Zone Of Possible Agreement. Or ZOPA now that's a catchy word.
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Post by newlender on Mar 14, 2016 7:52:13 GMT
Another complication is the ISA. There's little point in doing any of the above if a tax-free return is in the offing. I hope that the new products and the ISA will be announced and ready to go simultaneously so that people don't put £1K or more into Plus and then are told a few weeks later that they could have had 6.5% tax free if they'd waited. I am doing exactly what is recommended above - taking all my repayments and storing them in my current account ready to pay in £1K asap. The lure of 6.5% non-safeguarded isn't really attractive but if it's tax free, that changes things completely if we're talking just a couple of £K as a bit of a punt.
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Post by Ton ⓉⓞⓃ on Mar 14, 2016 10:36:24 GMT
Another complication is the ISA. There's little point in doing any of the above if a tax-free return is in the offing. I hope that the new products and the ISA will be announced and ready to go simultaneously so that people don't put £1K or more into Plus and then are told a few weeks later that they could have had 6.5% tax free if they'd waited. I am doing exactly what is recommended above - taking all my repayments and storing them in my current account ready to pay in £1K asap. The lure of 6.5% non-safeguarded isn't really attractive but if it's tax free, that changes things completely if we're talking just a couple of £K as a bit of a punt. Similar situation here But I'm not sure where I'll use my ISA, I'm not sure partly as I should put it where my greater gains will be but I think it's also best to have your greater bad debts outside an ISA so as to claim the loss against tax. If HMT delay the start of IF ISA's will the loss of benefit to users be real or will those who who put their p2p loans into IF ISA's be allowed to be said to have done that retrospectively? (I understand
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Post by geoffp on Mar 14, 2016 10:52:12 GMT
Hi - does anyone know whether defaults can be offset against earnings for tax purposes (I'm thinking about Zopa+ outside an ISA).
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Post by Ton ⓉⓞⓃ on Mar 14, 2016 11:34:23 GMT
Hi - does anyone know whether defaults can be offset against earnings for tax purposes (I'm thinking about Zopa+ outside an ISA). IF Isa's are being discussed on the general-p2x-discussion board, I think here: p2pindependentforum.com/post/36190/threadBut the rules haven't been finalized by HMT/HMRC (?) so there could be wrinkles or issues, but yes I'm expecting to.
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wapping35
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Post by wapping35 on Mar 14, 2016 13:26:16 GMT
Re: P2P Bad Debt relief this is the HMIT draft rules... www.gov.uk/government/publications/bad-debt-relief-for-peer-to-peer-investments/bad-debt-relief-for-peer-to-peer-investmentsAs you see from the above (and as mentioned above by Ton) the details rules are to be included in the Finance Act 2016 which should arise out of Wednesday's budget... ========== I would add that it is reasonably likely that shortly after Wednesday's budget speech HMIT will publish on their website the final P2P bad debt relief rules (which will be incorporated within the Finance Act 2016). Often shortly afterwards is in the late afternoon of Wednesday. If the rules are not being rolled out or there is a delay, normally HMIT will indicate that fact with the budget announcements. I guess Z might await seeing the rules until they roll out the new products... ?
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Post by Ton ⓉⓞⓃ on Mar 14, 2016 13:44:35 GMT
Something I find sobering is that HMT think that there will be £10million of bad debt next tax yr will be claimed. Then it increases arbitrarily by 5million each yr.
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ashtondav
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Post by ashtondav on Mar 14, 2016 14:08:06 GMT
Just to be clear if bad debt is not tax deductible the following will apply (as it did in the old ZOPA days of choice):
Gross return 10% Post bad debt return, pre tax, 6.5% Tax @ 40% on 10%, 4% Net return 2.5%
Compared to SG 5% so net of 40% tax, 3% available now
It was hardly ever worthwhile for a high rate taxpayer to indulge in ZOPA's higher risk markets back in the day when it was possible. I will only be investing in the 6.5% market, outside an ISA, if bad debt is tax deductible.
The current 6% pre tax (i'm a founder member with zero fees), 3.6% post tax is better than many ZOPA options pre SG.
Personally, I don't think a ZOPA product at 6.5% with no SG will compete with my average 6.3% at RS with Provision Fund.
ZOPA should have pitched it at 7% post bad debt.
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Post by blanik on Mar 14, 2016 16:16:40 GMT
Thanks astondav for pointing out the tax issues - I'd forgotten that that was one of the arguments for introducing SG in the first place. But if the bad debt proposal in the link from wapping35 comes into place I don't think it will make any difference to me - I may also be able to claim a small amount for 2015/16 ( I have some old non-SG loans ).
For my existing Zopa portfolio - I decided to sell £1,000 of loans and will put it immediately into Zopa+ - I know it will cost me £10 but expect to make that back with the higher rates, this will also be within my Personal Savings allowance so I don't need to wait for the ISA. I will then turn relending off and recycle the money manually from Classic to Plus until Zopa update their systems.
My simplistic view on the new Zopa products - and happy to be corrected if I am wrong.
The SG fund target is 110% of expected bad debt, If they have the bad debt figures correct Zopa Plus will pay a better rate than Zopa Classic. If they have the bad debt figures wrong by more than 10%, then neither the Plus or Classic product will pay the expected rates - and potentially the platform is at risk. So the only thing that SG is guaranteeing me is that I will be protected if my personal bad debt rate is worse than the expected average ( but at a cost of 2% ), I'm happy to take that risk so will invest in Zopa Plus.
Re Zopa vs RS.
At present I'm getting 6.4% recycling money on 5yr in RS ( average portfolio 6.3%) , but as the Zopa Plus product at 6.5% is a mixture of 1-5 year loans I would expect the Zopa product to have a lower headline rate ( if rates are expected to rise ). The additional fact that I'm a 0.5% fee payer makes Zopa Plus the more attractive investment at the moment.
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wapping35
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Post by wapping35 on Mar 14, 2016 19:36:55 GMT
And we now have a launch date:
New lender product launch
We're oh-so-nearly there!
We are very close to sharing our exciting new lender products with you. We plan to launch Zopa Access, Zopa Classic and Zopa Plus on Thursday 17th March.
Before launch we will need to restrict access to the Zopa website whilst we complete the data migration tasks. We plan to make the switch on Wednesday 16th March and will send you an email once everything is back up and running so that you can check the new products out.
In the mean-time, you can read more about our new products here.
Very best, The Zopa team ==========
And i guess if the budget does clarify the P2P bad debt relief on Wednesday, that will mean the tax issue re: Zopa + should be clear(er).
W35
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Post by geoffp on Mar 14, 2016 19:43:20 GMT
Just to be clear if bad debt is not tax deductible the following will apply (as it did in the old ZOPA days of choice): Gross return 10% Post bad debt return, pre tax, 6.5% Tax @ 40% on 10%, 4% Net return 2.5% Compared to SG 5% so net of 40% tax, 3% available now It was hardly ever worthwhile for a high rate taxpayer to indulge in ZOPA's higher risk markets back in the day when it was possible. I will only be investing in the 6.5% market, outside an ISA, if bad debt is tax deductible. The current 6% pre tax (i'm a founder member with zero fees), 3.6% post tax is better than many ZOPA options pre SG. Personally, I don't think a ZOPA product at 6.5% with no SG will compete with my average 6.3% at RS with Provision Fund. ZOPA should have pitched it at 7% post bad debt. Quite. This means that higher-rate taxpayer (outside an ISA) probably ought to wait until the bad/debt/tax position is clear. Meanwhile a back of the envelope estimate says that I need to switch at least 30% of my total Zopa Classic loan book into Zopa+ in order to get back to the existing Zopa/Safeguard return of 5%. That assumes that Z+ really yields 6.5% after bad debt.
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