Post by james on Apr 12, 2016 11:33:41 GMT
To claim your P2P bad debt relief just deduct the amount you're claiming from the combined gross interest number from all platforms and all other sources of gross interest you report to HMRC:
"6 April 15 to 5 April 16
The Lender can also claim relief on P2P loans that became irrecoverable on or after 6 April 2015 against other interest received in the same tax year from other P2P loans that were made through the same platform as the now irrecoverable loan.
This relief should be claimed in a tax return.
In order to claim relief in a tax return the lender should deduct their available relief from the P2P interest that they have received in that year before entering the figure in their tax return.
Example 2
Niall makes a series of interest bearing 5 year loans through Platform ‘Zapo’ in tax year 2014. In November 2015 one of the loans becomes irrecoverable. Niall can set off the irrecoverable amount of the loan against any interest received from other loans made through ‘Zapo’ in his tax return in the tax year 2015."
If you're lucky the platforms you use will already have done this and will also tell you how much can be carried over to other platforms. The relief can be deducted from other platforms' interest if the first one doesn't have enough interest to use it all:
"Geoffrey in tax year 2013 made 5 loans through platform ‘Zapo’ and 6 loans through platform ‘SateRetter’. When one loan made through Zapo became irrecoverable in tax year 2016, the irrecoverable amount was set against interest received from Zapo loans in the year. However, the irrecoverable amount exceeded the amount of interest received from the other Zapo loans in 2016. Geoffrey then set off the remaining irrecoverable amount against interest received from SateRetter loans in tax year 2016."
You can reduce the interest from all other platforms combined for the next four years if required:
"The Lender can claim relief on peer to peer (P2P) loans that became irrecoverable on or after 6 April 2015, against interest received from loans made through P2P platforms in the 4 years following the year in which the debt became irrecoverable.
This relief can only be claimed if the loss resulting from the irrecoverable loan cannot be used wholly against interest received through P2P platforms in the same year as the loan is treated as becoming irrecoverable.
If carried forward, relief for the outstanding amount of the irrecoverable loan must be used against P2P interest received in the earliest year first, up to a maximum of 4 years
In order to claim relief in a tax return the lender should deduct their available relief from the P2P interest that they have received in the relevant tax year before entering the figure in their tax return."
At various places claiming through a tax return is mentioned but that just means however you tell HMRC, by actual return or letter or phone call if you're just in PAYE and not self-assessment.
When capital is recovered from loans where you've claimed this, you add that recovered capital to the interest amount in subsequent years so you pay back the relief you got on that money:
"Bridget makes 15 identical £10 loans. 2 of these loans become irrecoverable in tax year 17 and she receives relief of £20 to set against the other P2P interest that she receives in the tax year 17. In tax year 18, one of the irrecoverable loans is partly recovered to an amount of £5. In the tax year 18 this £5 recovery is taxable as P2P interest received by Bridget."
There is one exception to the one gross number case, if you have foreign income to report. In that case you have to give the gross amount of foreign interest and if it's more than £2k you have to give it per source country on the foreign pages. So those two or more numbers may need to be adjusted individually.
"6 April 15 to 5 April 16
The Lender can also claim relief on P2P loans that became irrecoverable on or after 6 April 2015 against other interest received in the same tax year from other P2P loans that were made through the same platform as the now irrecoverable loan.
This relief should be claimed in a tax return.
In order to claim relief in a tax return the lender should deduct their available relief from the P2P interest that they have received in that year before entering the figure in their tax return.
Example 2
Niall makes a series of interest bearing 5 year loans through Platform ‘Zapo’ in tax year 2014. In November 2015 one of the loans becomes irrecoverable. Niall can set off the irrecoverable amount of the loan against any interest received from other loans made through ‘Zapo’ in his tax return in the tax year 2015."
If you're lucky the platforms you use will already have done this and will also tell you how much can be carried over to other platforms. The relief can be deducted from other platforms' interest if the first one doesn't have enough interest to use it all:
"Geoffrey in tax year 2013 made 5 loans through platform ‘Zapo’ and 6 loans through platform ‘SateRetter’. When one loan made through Zapo became irrecoverable in tax year 2016, the irrecoverable amount was set against interest received from Zapo loans in the year. However, the irrecoverable amount exceeded the amount of interest received from the other Zapo loans in 2016. Geoffrey then set off the remaining irrecoverable amount against interest received from SateRetter loans in tax year 2016."
You can reduce the interest from all other platforms combined for the next four years if required:
"The Lender can claim relief on peer to peer (P2P) loans that became irrecoverable on or after 6 April 2015, against interest received from loans made through P2P platforms in the 4 years following the year in which the debt became irrecoverable.
This relief can only be claimed if the loss resulting from the irrecoverable loan cannot be used wholly against interest received through P2P platforms in the same year as the loan is treated as becoming irrecoverable.
If carried forward, relief for the outstanding amount of the irrecoverable loan must be used against P2P interest received in the earliest year first, up to a maximum of 4 years
In order to claim relief in a tax return the lender should deduct their available relief from the P2P interest that they have received in the relevant tax year before entering the figure in their tax return."
At various places claiming through a tax return is mentioned but that just means however you tell HMRC, by actual return or letter or phone call if you're just in PAYE and not self-assessment.
When capital is recovered from loans where you've claimed this, you add that recovered capital to the interest amount in subsequent years so you pay back the relief you got on that money:
"Bridget makes 15 identical £10 loans. 2 of these loans become irrecoverable in tax year 17 and she receives relief of £20 to set against the other P2P interest that she receives in the tax year 17. In tax year 18, one of the irrecoverable loans is partly recovered to an amount of £5. In the tax year 18 this £5 recovery is taxable as P2P interest received by Bridget."
There is one exception to the one gross number case, if you have foreign income to report. In that case you have to give the gross amount of foreign interest and if it's more than £2k you have to give it per source country on the foreign pages. So those two or more numbers may need to be adjusted individually.