Capital Gains Tax filing needed

Platform status for CGT reporting.

While I don't guarantee to maintain this forever here's what I know so far about some platforms, feel free to update me so I can update this based on what each platform does and how well it's doing at providing what is needed to both determine if reporting is required for those not in self-assessment and for those who do have to report, giving suitable details to meet HMRC requirements including both summaries and the required detailed transaction/price reporting.

No reporting needed and no CGT due for original sellers:

Note that where a loan is described as a simple debt, it normally ceases to be a simple debt in the hands of the buyer on a secondary market, who then ends up with the usual CGT gain and loss potential if they sell it. So no CGT here means for the original seller of a loan acquired on the primary market only.

Assetz: 2016-04-16: pikestaff says primary markets are simple debts and sales are structured as new loans so still simple debts, based on a post by chris (probably) he thinks on this forum.

Funding Circle: 2016-04-16: pikestaff says primary markets are simple debts and sales are structured as new loans so still simple debts, based on a previous version of their FAQ.

FundingSecure: 2016-07-18: Their tax FAQ appears to be describing primary market loans as simple debts so no CGT liability for the original seller of a loan purchased on the primary market. They mention incentive bonuses and cashbacks but don't say how they believe that they should be treated for income and capital gains taxes, if you ask and they clarify please let me know so I can update this. There's also interesting discussion at SM and tax.

RateSetter: 2016-04-16: pikestaff says primary markets are simple debts and sales are structured as new loans so still simple debts.

SavingStream: 2016-04-16: meledor mentions 10.4 in T&C saying all current deals are simple debts so no issues. pom reports asking SS and 'response from Tim to my email "SM transactions are structured in exactly the same way as if you were investing in a fresh new loan with plenty of availability."'. Old terms loans believed by GSV3MIaC to be the same. Par sales only.



Not yet fully clear:

Bondora: 2016-04-16: Nothing available except the transaction histories that can be downloaded. Primary deals will be simple debts, secondary probably not, unconfirmed by platform. Can sell at premium or discount.

MoneyThing: 2016-04-21: MT are taking professional advice. I'm not currently sure of tax status of primary or secondary transactions but primary at least probably simple debts. Par sales only. Cashback believed to be non-taxable "inducement to lend" rather than purchase price discount.

Some loans are not simple debts, CGT reporting and payment may be needed: Gains and losses on secondary market are subject to CGT.

Ablrate: 2016-05-25: Full CGT reporting needed. According to their accountant in What is the Tax Position? their loans are securities covered by the Accrued Income Scheme. Gains and losses on secondary market are subject to CGT. Instant returns are discounts on purchase price so capital gain on sale, instead of income tax at time of payment of instant return. Accrued interest is taxable to seller at receipt, buyer deducts what they pay from interest received from borrower. Can sell at premium or discount. Older wrong text: Original deals believed to be simple debts, ditto secondary, but awaiting professional confirmation.

ThinCats: 2016-04-16: pikestaff says told that secondary deals are true sales so purchased loans are not simple debts any more.

James, I assume this refers to a situation where you wish to claim for a loss against CGT?

This applies to the new tax year?

Only for loans sold but NOT for loans repaid?

james is correct that if you have sales of chargeable assets in excess of £44.4k you will have to comply with the extremely onerous reporting requirements, even if your chargeable gains are tiny.  This is not new; it has always been the case.  As noted by bigfoot12 , the reporting requirements apply only if you are over the limit, regardless of whether you are in self-assessment.

So you need to know which assets are chargeable assets (within the scope of CGT) and which are not.

The consensus is that p2p loans generally are "simple debts".  Assuming this to be true, they are not chargeable assets for the INITIAL lender.

The problem comes with second-hand loans.  A second-hand "simple debt" is a chargeable asset.  Any loans where you are not the initial lender would, ON THE FACE OF IT, be chargeable assets and sales of them would count toward the limit.

HOWEVER, on many platforms (including RS, AC and FC that I am sure of), "sales" are structured as redemptions of the existing loan funded by a new loan.

WHERE THIS IS SO, YOU AVOID THE PROBLEM.  There used to be a slightly guarded explanation of this point in FC's FAQ, but the FAQ has recently been updated to cover the new bad debt relief and it has disappeared in the update.

I have, however, been told by TC that sales on TC are true sales.  Consequently the problem will arise on TC.  I have a full record of all my sales and purchases on TC but hope I won't ever need to use it for this purpose!

My personal view on all this is that

(1) HMRC is rather unlikely to take the point.

(2) There won't be many lenders who go over the limit.

(3) Many lenders with large volumes of purchases and sales of second-hand loans (whether over the limit or not) may in fact be traders who should be reporting ALL gains and losses (including on sales of new loans) as income.  If I were HMRC would prioritise going after them.

I am sure that a repayment is not a disposal.  The gain or loss on disposal of an amortised loan would in principle be calculated by reference to amortised cost, which could be rather painful to work out.

I was wrong.  They are. p2pindependentforum.com/post/108721/thread

Thanks, I agree on all points there, particularly the painful aspect.

And now I'm vanishing for at least some hours maybe a day or two. I'll hope that I'm provably grossly wrong on the requirements and that someone(s) is kind enough to explain so we can put that aspect at least to bed. Not that it'll help,. i suppose, when there is a gain, since that does seem reportable regardless, unless, joy of joys, that also isn't.