Investboy
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Trying to recover from P2P revolution
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Post by Investboy on Mar 22, 2016 23:16:05 GMT
We all know that SM is a giant minefield as the buyer is liable for all tax on all interests paid and the seller pays no tax as he got not interests but some 'premium/bonus/whatever'
But if one invests as a Ltd company (like myself) apparently the tax liability is not an issue due to accounting rules. I'm not an accountant so don't know all the details but my understanding is that for example:
1. Loan part of £100 bought with premium 1%, after 4 months so paid £101 for capital + £4.00. In total £105. After 2 months he gets £6 interests and £100 capital, £106, that makes £1.00 'profit'
2. Normal person (20% taxpayer) pays 20% but not of £1.00 but on all £6.00, that gives £1.20, so he actually lost 20p. Great!
3. But for the Ltd company pays capital gains/corporation tax on profit. So it will pay 20% of £1.00 only = 20p, giving 80p profit. (rate about 4.8%)
This is a rough example and the details I'll leave to my accountant.
So my big question is: does FS tax statement caters for that. When I generate the statement pdf I see only 1 number and I'm not sure if they totalled only the profit (3) or all the interests (2). I don't track all the loans on my spreadsheet so can't tell.
Can someone verified if for Ltd companies their tax statement is correct and showing correct number?
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Post by profunder on Mar 22, 2016 23:38:37 GMT
No you will need to prepare a trial balance for your limited company returns.
In other words you need to calculate separately:
(1) the net deposits
(2) the amount currently overdue (debtors)
(3) the bad debt amount
(4) the amount earned in interest/fees/bonuses
(5) amount currently invested
Cross check above with your balance.
Then for your accountant to prepare your adjusted trial balance:
(1) accumulated interest not yet paid (deferred income)
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Post by fundingsecure on Mar 22, 2016 23:41:12 GMT
Currently the tax report simply reports actual interest paid and any capital losses between any two dates. We do not provide any additional breakdown for companies / trusts / overseas investors where the tax requirements may be different.
For the secondary market all historic transactions are listed under "secondary market history" - which should provide sufficient information, in conjunction with the standard tax form.
Finally you can download your complete activity list under "My Activity" - this shows all transactions, including the secondary market. Filtering this in Excel should enable you to obtain the necessary figures required to ensure an accurate tax calculation.
Unfortunately it would not be possible to cater for every potential requirement for individuals, companies etc.
In addition we cannot provide any advice on specific taxation questions.
Hopefully the above helps at least to direct you to the appropriate place to find the information you need.
FundingSecure
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duck
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Post by duck on Mar 23, 2016 6:39:13 GMT
Thank you fundingsecure for the clear and concise answer. Investboy I don't know how accommodating your accountants are (or if you are charged per hour!) but personally I like to provide mine with a simple summary along with the raw data. Whilst I am in my first year of investing as a Ltd Co through FS it has proved simple to set up my spreadsheet based, as suggested by fundingsecure, on the activity list. I've automated mine to drag out loan numbers, 'invested', 'purchased', 'sold', 'interest' etc. That way not only can I see the exact profit/loss and tax position with every transaction but you also avoid having to worry about spending time finding a single investment in a long list. On a separate note you need to be able to account for the location of all the Company money at all times, this is accomplished by the spreadsheet backed up by bank statement transactions. |
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Post by profunder on Mar 23, 2016 10:03:24 GMT
Thank you fundingsecure for the clear and concise answer. Investboy I don't know how accommodating your accountants are (or if you are charged per hour!) but personally I like to provide mine with a simple summary along with the raw data. Whilst I am in my first year of investing as a Ltd Co through FS it has proved simple to set up my spreadsheet based, as suggested by fundingsecure, on the activity list. I've automated mine to drag out loan numbers, 'invested', 'purchased', 'sold', 'interest' etc. That way not only can I see the exact profit/loss and tax position with every transaction but you also avoid having to worry about spending time finding a single investment in a long list. On a separate note you need to be able to account for the location of all the Company money at all times, this is accomplished by the spreadsheet backed up by bank statement transactions. Just be thankful that interest is due at end of loan, on some other sites I have had to make detailed programs to calculate my trial balance. As interest can be paid 1 week late but if this crosses an accounting period, you have a debtor. In fact it's a virtual nightmare, but thankfully my computer is patient and doesn't complain doing the analysis 
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ben
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Post by ben on Mar 23, 2016 10:06:09 GMT
Thank you fundingsecure for the clear and concise answer. Investboy I don't know how accommodating your accountants are (or if you are charged per hour!) but personally I like to provide mine with a simple summary along with the raw data. Whilst I am in my first year of investing as a Ltd Co through FS it has proved simple to set up my spreadsheet based, as suggested by fundingsecure, on the activity list. I've automated mine to drag out loan numbers, 'invested', 'purchased', 'sold', 'interest' etc. That way not only can I see the exact profit/loss and tax position with every transaction but you also avoid having to worry about spending time finding a single investment in a long list. On a separate note you need to be able to account for the location of all the Company money at all times, this is accomplished by the spreadsheet backed up by bank statement transactions. Just be thankful that interest is due at end of loan, on some other sites I have had to make detailed programs to calculate my trial balance. As interest can be paid 1 week late but if this crosses an accounting period, you have a debtor. In fact it's a virtual nightmare, but thankfully my computer is patient and doesn't complain doing the analysis My computer is very patient to unfortunately the user is not
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Post by profunder on Mar 23, 2016 10:14:55 GMT
Just be thankful that interest is due at end of loan, on some other sites I have had to make detailed programs to calculate my trial balance. As interest can be paid 1 week late but if this crosses an accounting period, you have a debtor. In fact it's a virtual nightmare, but thankfully my computer is patient and doesn't complain doing the analysis My computer is very patient to unfortunately the user is not And that's why you make a program, so you can leave while it cruches the numbers
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bernard
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Post by bernard on Mar 23, 2016 19:51:10 GMT
What would be very useful is the ability to get loan balances and uninvested cash on a certain historic date (ie a statement of funds as at that date). This is useful for all investors and should not be too difficult fundingsecure? I currently weight my investing to the platforms that provide this ability to look at balances as at a historic date, and remain cautious with the ones who don't. Something very similar to what shows as the 'Current Active Investments', plus cash/yet to be activated, but for a user specified date in the past. |
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SteveT
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Post by SteveT on Mar 23, 2016 20:11:52 GMT
What would be very useful is the ability to get loan balances and uninvested cash on a certain historic date (ie a statement of funds as at that date). This is useful for all investors and should not be too difficult fundingsecure ? I currently weight my investing to the platforms that provide this ability to look at balances as at a historic date, and remain cautious with the ones who don't. Something very similar to what shows as the 'Current Active Investments', plus cash/yet to be activated, but for a user specified date in the past. You can calculate that easily enough by downloading your "My Activity" transactions and pulling them (up to the date you're interested in) into a pivot table. However you need a lookup table to translate the first 6 characters of each entry into a clean transaction "type", ie.: Left 6 Type
Bank T Bank Transfers Bonus Interest Capita Capital Repaid Intere Interest Invest Investment Purcha SM Purchase Sold & SM Sale
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bernard
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Post by bernard on Mar 23, 2016 20:31:10 GMT
Thanks SteveT for showing how one can download the available information and process. However it does all goes to show that it shouldn't be too hard for the website to do this for you in in easy report, which should be more readily available and hopefully less errorprone, so I would still like to see this on the website from fundingsecure. I have found with other approaches like this they can lead to errors when done manually due to the provider changing formats, introducing new codes, etc. |
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stevio
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Post by stevio on Mar 23, 2016 21:19:29 GMT
Mods Admin this might be better in general than just in FS I also started investing P2P recently via Ltd. I do most of the stuff for company like VAT and PAYE etc, so have a fairly good understanding of the basic tax laws Can you point me in the direction of literature where this is detailed please? My accountant treated savings interest as income, so thought P2P might be similar More bed time reading it seems! |
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