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Post by endure on Jul 3, 2016 20:55:50 GMT
Hi folks Recently joined and am working my way through all the threads at the moment. Can I ask a simple question please. Which of the P2P platforms offer a drawable regular monthly income? I'm an old fart with £5K to invest and would like a bit of income to supplement my pension. Thank you  |
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locutus
Member of DD Central
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Post by locutus on Jul 3, 2016 21:01:15 GMT
Virtually all of them do. You're best starting from a position of thinking what type of lending do you feel most comfortable with. Do you want to lend to individuals or companies? Are you happy to lend unsecured or would you rather your loans be asset backed? If so, what type of asset do you want to lend on? Jewellery, cars, planes, paintings, property are all options. Do you want the comfort of a provision fund? Are you happy to do due diligence or do you want to set and forget? Do you have a target rate in mind?
I suggest you educate yourself a bit more. Look at the main P2P players listed in the forum, visit their sites to see what they offer and then read a few posts about the ones that take your fancy.
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Post by brokenbiscuits on Jul 3, 2016 22:49:46 GMT
With the amounts involved you could be looking at £20 to £50 a month income.
The invest and forget type ones will be near the bottom end of the returns spectrum. are you happy to spend a fair chunk of time researching and managing your investment to get the higher returns?
Would it not make more sense to just put it in a high interest bank account where there is FCA protection, especially if you are now retired and can't afford to replace the 5k should you suffer any capital loss.
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Post by endure on Jul 3, 2016 22:58:32 GMT
I already have all the high interest bank accounts I can get.
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ben
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Post by ben on Jul 3, 2016 23:14:32 GMT
With that amount I would personally just put it into ratesetter or zopa (lower risk but obviously not no risk) not really worth the effort of looking at the higher ones unless you intent to regularly add to it.
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james
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Post by james on Jul 4, 2016 5:33:50 GMT
Assuming you're not yet 75 are you still making pension contributions? You can pay in £2880 net, have it grossed up with basic rate tax relief to £3600 and then take out 25% tax free and the rest as taxable income. You're entitled to the basic rate tax relief even if you aren't paying any income tax. Virgin offers a pension that is cheap for doing this.
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Post by endure on Jul 4, 2016 16:19:35 GMT
I believe that's called 'immediate vesting'? Virgin don't seem to mention that on their website. They also say that they don't provide annuities for their pensions.
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james
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Post by james on Jul 4, 2016 20:19:32 GMT
I believe that's called 'immediate vesting'? Virgin don't seem to mention that on their website. They also say that they don't provide annuities for their pensions. Immediate vesting normally means paying money into a pension and immediately buying an annuity. What I described doesn't involve an annuity purchase at all so it doesn't matter that Virgin doesn't sell annuities. It's enough that they offer the lump sum method UFPLS and they do. Here's now the numbers work out for the most common cases for what I described: At basic rate income tax with all personal allowance used: Pay in £2,880, take out 25% tax free, £900, take out £2,700 taxed at 20% net, £2,160. Net gain £900 + £2,160 - £2,880 = £180 With at least £2,700 of personal allowance still unused: Pay in £2,880, take out 25% tax free, £900, take out £2,700 nil tax due, £2,700, £2,700. Net gain £900 + £2,700 - £2,880 = £720 If only some personal allowance remains the result is somewhere between the two cases. With between £120 and £720 of after tax extra income available per year you can see why I think it's an excellent move. This is available to anyone from age 55 to before age 75. The money purchase annual allowance for contributions to pensions in the name of the person by anyone is reduced from £40,000 to £10,000 of pension contributions a year and carry forward is barred for anyone who uses this flexible withdrawing. So it's less attractive for people who are continuing to work, though they can take out the 25% tax free lump sum and not suffer this reduction. As can an older person who anticipates having income tax personal allowance available in some future years, say if they are planning to defer their state pension for a while.
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Post by endure on Jul 5, 2016 8:24:11 GMT
Thanks James. I'll make some enquiries |
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Post by endure on Jul 5, 2016 8:34:58 GMT
Another quick question - how often can I do this. Just once?
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Post by GSV3MIaC on Jul 5, 2016 11:53:55 GMT
Every year (although you still have to be alive. 8>.).
There is an upper limit on what you can contribute each year (and overall) (especially if you don't actually PAY tax) but you are not going to threaten it with £5k, iirc.
p.s. Ah .. also (iirc) you can't 'round trip' the same pound multiple times in the same tax year (the regulations seeking to prevent that are seriously complicated).
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james
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Post by james on Jul 5, 2016 15:48:38 GMT
Every year (although you still have to be alive. 8>.). There is an upper limit on what you can contribute each year (and overall) (especially if you don't actually PAY tax) but you are not going to threaten it with £5k, iirc. p.s. Ah .. also (iirc) you can't 'round trip' the same pound multiple times in the same tax year (the regulations seeking to prevent that are seriously complicated). As you say, it's for up to 2880 net per tax year unless someone has earned income, when it's whatever that is up to the 40k or reduced 10k cap. While there are limits on recycling the tax free lump sum they can't apply to this situation because one of them is that the amount of tax free lump sum taken must exceed 7500 and you can't do that with 25% of 3600 unless you're also taking tax free lump sum money from past years. Then there are other rules that can apply to make it fine, or just the knowledge that HMRC has never used the rules on an individual because they are mainly designed to prevent organised large scale schemes. The limits on tax free lump sums aren't about round tripping in the same tax year, but the 7500 is measured over a rolling twelve month period.
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