locutus
Member of DD Central
Posts: 1,059 
Likes: 1,622
|
Post by locutus on Jul 3, 2016 17:19:07 GMT
Short dated loans also carry higher risk of default as you're holding to term.
|
|
duck
Member of DD Central
Posts: 2,882
Likes: 6,976
|
Post by duck on Jul 4, 2016 4:46:25 GMT
Why just short dated for Ltd? Would you not look at the overall return, irrespective of the length? Sorry for the confusion, I use 'short dated' to simply mean not full term, I buy almost exclusively on the aftermarket (less than 5 purchases on the primary market) to avoid draw down delays. It takes no longer than running my personal account (even if as normal multiple parts are held on one loan) ..... one spreadsheet 'sheet' where the download is dumped which is then copied to another where the info is sorted by loan number ..... total purchase cost minus capital and interest returned equal profit. Agree with you locutus regarding the default risk and whilst my Ltd Co only has one at present this will undoubtable rise which is why I'm currently carrying out a few 'experiments'. 
|
|
stevio
Member of DD Central
Posts: 2,065
Likes: 894
|
Post by stevio on Jul 4, 2016 14:42:17 GMT
Why just short dated for Ltd? Would you not look at the overall return, irrespective of the length? Sorry for the confusion, I use 'short dated' to simply mean not full term, I buy almost exclusively on the aftermarket (less than 5 purchases on the primary market) to avoid draw down delays. It takes no longer than running my personal account (even if as normal multiple parts are held on one loan) ..... one spreadsheet 'sheet' where the download is dumped which is then copied to another where the info is sorted by loan number ..... total purchase cost minus capital and interest returned equal profit. Agree with you locutus regarding the default risk and whilst my Ltd Co only has one at present this will undoubtable rise which is why I'm currently carrying out a few 'experiments'. Thanks Duck It's interesting different strategies, particularly utilizing a business
|
|
littleoldlady
Member of DD Central
Running down all platforms due to age
Posts: 3,045
Likes: 1,862
|
Post by littleoldlady on Jul 4, 2016 18:10:21 GMT
Short dated loans also carry higher risk of default as you're holding to term. IMO this is only true if you withdraw your money. If you reinvest in a longer term loan you are merely rolling over the risk - and into what must be, all other things being equal, an inherently riskier loan. Riskier because in the event of some sort of crash where there is a rush to the exit you will be at the back of the queue. Or am I missing something?
|
|
james
Posts: 2,205
Likes: 955
|
Post by james on Jul 18, 2016 15:31:53 GMT
I buy almost exclusively on the aftermarket (less than 5 purchases on the primary market) to avoid draw down delays. How well does the FundingSecure CGT reporting work for you in that situation? That is, the reporting for the CGT liable gains or loses you might get when selling or buying or having repaid by the borrower after you've bought on the secondary market? How do they account for the CGT treatment of the accrued interest that is bundled into the purchase price?
|
|
duck
Member of DD Central
Posts: 2,882
Likes: 6,976
|
Post by duck on Jul 18, 2016 16:03:02 GMT
I buy almost exclusively on the aftermarket (less than 5 purchases on the primary market) to avoid draw down delays. How well does the FundingSecure CGT reporting work for you in that situation? That is, the reporting for the CGT liable gains or loses you might get when selling or buying or having repaid by the borrower after you've bought on the secondary market? How do they account for the CGT treatment of the accrued interest that is bundled into the purchase price? Simply put it doesn't! I remember FS saying in a post that their interest statements wouldn't work for businesses (no problem with that) so I have set up my spreadsheets to work accordingly. My declaration to my accountants (for FS) this year was my spreadsheet. Trading profit is shown on one sheet with another dealing with CGT. Both these sheets run off the downloaded transaction statement. Whilst my personal interest statement was exactly correct this year I still run a similar sheet for my personal investments since both feed into a 'discount calculator' for aftermarket buying/selling.
|
|
stevio
Member of DD Central
Posts: 2,065
Likes: 894
|
Post by stevio on Jul 18, 2016 16:32:48 GMT
How well does the FundingSecure CGT reporting work for you in that situation? That is, the reporting for the CGT liable gains or loses you might get when selling or buying or having repaid by the borrower after you've bought on the secondary market? How do they account for the CGT treatment of the accrued interest that is bundled into the purchase price? Simply put it doesn't! I remember FS saying in a post that their interest statements wouldn't work for businesses (no problem with that) so I have set up my spreadsheets to work accordingly. My declaration to my accountants (for FS) this year was my spreadsheet. Trading profit is shown on one sheet with another dealing with CGT. Both these sheets run off the downloaded transaction statement. Whilst my personal interest statement was exactly correct this year I still run a similar sheet for my personal investments since both feed into a 'discount calculator' for aftermarket buying/selling. Companies don't pay CGT, only CT
|
|
duck
Member of DD Central
Posts: 2,882
Likes: 6,976
|
Post by duck on Jul 18, 2016 16:37:37 GMT
|
|
Neil_P2PBlog
P2P Blogger
Use @p2pblog to tag me :-)
Posts: 355
Likes: 209
|
Post by Neil_P2PBlog on Aug 17, 2016 14:02:12 GMT
So, Ltd companies don't pay tax on interest income?
|
|
locutus
Member of DD Central
Posts: 1,059
Likes: 1,622
|
Post by locutus on Aug 17, 2016 14:06:43 GMT
So, Ltd companies don't pay tax on interest income? They pay corporation tax on it as with all income.
|
|
Neil_P2PBlog
P2P Blogger
Use @p2pblog to tag me :-)
Posts: 355
Likes: 209
|
Post by Neil_P2PBlog on Aug 17, 2016 16:34:08 GMT
So, Ltd companies don't pay tax on interest income? They pay corporation tax on it as with all income. So this dynamic of selling just before end of term on the secondary market is: Higher rate personal tax payers selling to: A) anyone earning less than £1000 per year in interest (40% tax difference) B) anyone with less than £17k yearly income (40% tax difference) C) ltd companies (20% tax difference) D) basic rate tax payers without student loans (20% tax difference)
|
|
duck
Member of DD Central
Posts: 2,882
Likes: 6,976
|
Post by duck on Aug 18, 2016 5:29:55 GMT
So this dynamic of selling just before end of term on the secondary market is: Higher rate personal tax payers selling to: A) anyone earning less than £1000 per year in interest (40% tax difference) B) anyone with less than £17k yearly income (40% tax difference) C) ltd companies (20% tax difference) D) basic rate tax payers without student loans (20% tax difference) Not just higher rate tax payers selling, 20% tax payers have an advantage if they are going to breach the 20% band and even when they are not there is still generally an advantage ........ and they are de-risking at the same time. It's easy with a spreadsheet to find the sweet spot of time held and discount offered. Whilst the returns are generally small a basic rate tax payer can turn in a profit if they buy and sell on the secondary market (I've been doing it), again it is all down to the timing and the purchase price.
|
|
|
|
Post by gaspilot on Mar 18, 2017 6:57:24 GMT
Hi duck Can you clarify what is said on the FS website below?: 'Secondary market transactions are considered to be purchases / sales of the original loan. As such they are not liable for capital gains tax. Any premium or discount paid / received is considered as an incentive, not as a profit or loss.
In the event of a capital loss due to a default the loss is calculated against the original capital value, not including any premium / discount paid through the secondary market.
NOTE: If you buy and then resell the same loan part on the secondary market you may be considered by HMRC to be a trader and be potentially liable for capital gains tax. The current capital gains annual exempt allowance for an individual is £11,100.' Does this mean that the CGT liability is only there if the buying and selling are both done on the SM? It could be interpreted that a purchase on the PM and a sale on the SM doesn't carry a CGT liability. I think this interpretation may be down to grammar and semantics but I'd like to know your take on it. |
|
stevio
Member of DD Central
Posts: 2,065
Likes: 894
|
Post by stevio on Mar 18, 2017 11:29:23 GMT
Hi duck Can you clarify what is said on the FS website below?: 'Secondary market transactions are considered to be purchases / sales of the original loan. As such they are not liable for capital gains tax. Any premium or discount paid / received is considered as an incentive, not as a profit or loss.
In the event of a capital loss due to a default the loss is calculated against the original capital value, not including any premium / discount paid through the secondary market.
NOTE: If you buy and then resell the same loan part on the secondary market you may be considered by HMRC to be a trader and be potentially liable for capital gains tax. The current capital gains annual exempt allowance for an individual is £11,100.' Does this mean that the CGT liability is only there if the buying and selling are both done on the SM? It could be interpreted that a purchase on the PM and a sale on the SM doesn't carry a CGT liability. I think this interpretation may be down to grammar and semantics but I'd like to know your take on it. I believe correct Potential for no IT or CGT
|
|
