hazellend
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Post by hazellend on Mar 19, 2016 19:05:02 GMT
Copied and pasted article below:
"Peer-to-peer lending
An odd new relief applies for 2016/17 onward for losses on peer-to-peer loans.
Odd because –
a) it applies only to loans made through a regulated peer-to-peer operator (normally a website);
b) the relief is not given by setting the loss against income; it can only be set against interest received from other loans made via the same website – although an election can be made to extend the relief to income on peer-to peer loans made through other websites;
c) the relief can also be claimed on purchased loans provided that the acquisition was made through the relevant website;
d) the relief applies to existing bad debts provided that the amount became irrevocable after 5 April 2015;
e) the relief does not apply to loans made by a company or a trust; and
f) the loan must either have been for £25,000 or less or must have been a “personal loan” (i.e. one which is not used wholly or predominantly for the purpose of a business).
There is obviously a claw-back of the relief to the extent that any amount is subsequently recovered."
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shimself
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Post by shimself on Mar 19, 2016 19:07:51 GMT
I don't like F at all
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adrianc
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Post by adrianc on Mar 19, 2016 19:16:18 GMT
"or" So <£25k OR lender-to-individual. All that's not allowed is £25k+ to businesses. Dunno about you, but I'm nowhere near lending £25k+ to any one borrower. Life's too short for that. Question is at what point do Flexibly Clawed-back defaults become "irrevocable"?
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shimself
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Post by shimself on Mar 19, 2016 19:50:45 GMT
"or" So <£25k OR lender-to-individual. All that's not allowed is £25k+ to businesses. Dunno about you, but I'm nowhere near lending £25k+ to any one borrower. Life's too short for that. Question is at what point do Flexibly Clawed-back defaults become "irrevocable"? Ah, a 25K investment in a loan, not the whole loan being <25K. I think I got hoisted by my own pedantry. Thanks The OP said this was odd, it isn't is it, isn't it as previewed? As for irrevocable, it's basically for the platforms to declare a loan bad, I don't think it could be done any other way.
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hazellend
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Post by hazellend on Mar 19, 2016 19:53:25 GMT
Hi. Sorry, I copy and pasted the information in my original post.
I don't think it's odd at all. The tax expert commenting thought it was odd, as they felt the government is encourgaing people into P2P lending with this tax relief, in what the consider a high risk investment.
I don't think it is odd at all and is another great relief for savers, investors in this budget.
Another thought I have had is that it makes it less appealing to do P2P under an ISA wrapper, as you would then not be able to offset any losses.
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registerme
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Post by registerme on Mar 20, 2016 0:09:27 GMT
Cross posting (well, copy pasting actually) from a thread in the Zopa forum:- |
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Post by Deleted on Mar 20, 2016 10:56:09 GMT
Dumb question, how does this work?
Say I lend £1000 to borrower X via a website. That borrower is unable to pay back and goes in default.
Do I have to wait for website to make all possible efforts to recover it and when they say they can't recover it, call HMRS and tell them,
"hey I had loaned to a bad borrower and now I am £1000 short, "
1. could you please reduce my income tax by £1000?
OR
2. I earned £1500 interest in total this year, could you please not tax me on £1000"
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SteveT
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Post by SteveT on Mar 20, 2016 10:59:52 GMT
Dumb question, how does this work? Say I lend £1000 to borrower X via a website. That borrower is unable to pay back and goes in default. Do I have to wait for website to make all possible efforts to recover it and when they say they can't recover it, call HMRS and tell them, "hey I had loaned to a bad borrower and now I am £1000 short, " 1. could you please reduce my income tax by £1000? OR 2. I earned £1500 interest in total this year, could you please not tax me on £1000" Have you read the summary (first link) in registerme's post immediately above? That should answer your questions.
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shimself
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Post by shimself on Mar 21, 2016 8:35:28 GMT
Dumb question, how does this work? Say I lend £1000 to borrower X via a website. That borrower is unable to pay back and goes in default. Do I have to wait for website to make all possible efforts to recover it and when they say they can't recover it, call HMRS and tell them, "hey I had loaned to a bad borrower and now I am £1000 short, " 1. could you please reduce my income tax by £1000? OR 2. I earned £1500 interest in total this year, could you please not tax me on £1000" I think it's like this: You would normally wait for the website to say (to you) that the loan is in default. In your example above you would say to HMRC, Interest earned 1500, less bad debt 1000 = taxable amount 500.
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adrianc
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Post by adrianc on Mar 21, 2016 9:19:13 GMT
You would normally wait for the website to say (to you) that the loan is in default. My only default/loss experience is with Fish Cakes - and when they call it a default, it's not deader-than-dead. That's when they start to send large men in dark suits around to the borrower's house and say "Wouldn't it be a shame if something were to... happen to all this?" It works extremely well, too. So far, my defaults have seen recoveries of a whole 4.4%. <thinks> Hmm. Hold on a minute... But, no, it's when that defaulted collection process is abandoned that the HMRC recoup kicks in.
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SteveT
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Post by SteveT on Mar 21, 2016 10:09:40 GMT
The guidance document states:
"Whether a loan has become irrecoverable should be judged on a case by case basis, however the following common examples are relevant:
When the borrower has entered formal recovery procedures such as liquidation, administration, receivership or bankruptcy the debt would normally be considered irrecoverable.
If the debt is released by the lender it would normally be considered irrecoverable.
As the loan will be managed by a platform, the platform would usually be in a position to determine when a loan has become irrecoverable. The platform would then inform the lender that the loan had become irrecoverable."
Funny Chimps downgrade many loans that would not satisfy these criteria so, for 2015/16, we'll have to make a loan-by-loan decision ourselves I imagine. From 2016/17 onwards, when platforms are expected to make the offset automatically, I assume they will have to signal / change their definition of when a loan is deemed irrecoverable.
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ilmoro
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'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on Mar 31, 2016 9:55:01 GMT
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pikestaff
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Post by pikestaff on Mar 31, 2016 10:36:03 GMT
ilmoro , thank you. For those who missed it, there was extensive discussion of the draft guidance in this thread: p2pindependentforum.com/thread/2447/peer-relief-proposed-technical-criteriaI will read through the "final" guidance to see what has changed and whether any of the issues raised have been addressed. It should be noted that the guidance cannot be quite final yet, because it refers to legislation in the Finance Bill, which has yet to be approved - although it is not likely that Parliament will make changes to something so technical.
Edit: Please note that the links in wapping35's post quoted by registerme above are all out of date. See here for up-to-date links. p2pindependentforum.com/post/104592/thread
I will post my further comments on that thread in due course.
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? (you really couldn't make this up)
