stevio
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Post by stevio on Oct 18, 2016 19:35:52 GMT
OK but you would still need to get that return every day of the year, rather than for just a few days here
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sqh
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Before P2P, savers put a guinea in a piggy bank, now they smash the banks to become guinea pigs.
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Post by sqh on Oct 18, 2016 20:36:18 GMT
Also that's a annual return if you could continue to repeat it constantly for a year, ie you haven't nearly doubled your money, as might sound Actually, that is exactly what you would be able to achieve, if FS reduced the 30 day timescale. In fact in extreme cases it would be much much greater. If loans were traded on the SM with 1 day until renewal, renewed on time and filled the same day, then the discount would be multiplied by 365. So £1000 invested on FS, buying loans on the SM at 2% discount with 1 day until renewal would return over £2.6 trillion in 3 years, before tax. Of course it depends on FS growing much faster.
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duck
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Post by duck on Oct 19, 2016 6:18:35 GMT
Yes stevio , looked at in isolation the amounts are small but if for instance you add in an individual who should be paying higher rate tax he can 'sell off' and keep at basic rate whilst pocketing the gain in capital. The Company doesn't turn in a profit on the deal so no CT is due and capital could have left the Company to the individual without paying the 7.5% dividend tax. : I expect I'm being a bit thick here, but I need a further explanation. Firstly, ISTM that the higher-rate individual who sells a loan part to their company avoids paying any tax on their interest earned up to the date of the sale, and pockets the gain in capital tax-free. So I don't understand the mention of 'basic rate' in your first sentence I've quoted above. Secondly, I don't see how any capital has left the company. The Company has bought the loan part for the capital amount plus the accrued interest. Some time later, the loan will be repaid -- hopefully -- and the company will receive back that same capital amount plus the accrued interest. Any interest accrued between the date of sale and the repayment date will be earnings to the company, which is reasonable because the company's money has been invested in the part for that period. But how has any capital left the company in the direction of the individual? What am I missing? Not being thick at all. I have throughout my working life managed to stay as a basic rate tax payer so I tend to view everything from that position. The point I was making was that you can avoid going into higher rate by selling on if that is the position you find yourself in. So the potential tax saving is possibly greater than for somebody already paying at higher rate. On the Company purchase, you are correct but what finds it's way out of the Company is any premium that has been paid. For example the company pays £5 premium on a purchase this is passed to the individual 'tax free' so £5 has 'escaped' the company to the benefit of the individual. So when the loan repays the Company works out the profit on the loan (Returned Capital plus total interest minus Cost price which includes premium) so the Company is also not paying tax on the £5. There is also the possible benefit here that potential Dividend tax on the £5 has been avoided. If the 30 day limit disappeared and the Company 'bought' on the last day it would never turn in a profit on a deal so these losses could be offset against other profits and hence lower CT. With the 30 day limit in place some 'new' interest should be paid at term which might offset the premium paid but that all depends on the 'deal'......
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mikes1531
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Post by mikes1531 on Oct 19, 2016 20:07:38 GMT
On the Company purchase, you are correct but what finds it's way out of the Company is any premium that has been paid. For example the company pays £5 premium on a purchase this is passed to the individual 'tax free' so £5 has 'escaped' the company to the benefit of the individual. So when the loan repays the Company works out the profit on the loan (Returned Capital plus total interest minus Cost price which includes premium) so the Company is also not paying tax on the £5. There is also the possible benefit here that potential Dividend tax on the £5 has been avoided. : I wondered whether transfers at a premium might have produced the effect you mentioned. But I thought that if HMRC ever looked into the accounts they'd take a very dim view of such practice. It wouldn't take much investigating to see that 'arms length' sales in the FS SM at any time near approaching maturity would be made at a discount -- one quick look at the list of parts for sale would confirm that's what's happening at the present. So ISTM that a sale/purchase between a related seller and buyer at a premium clearly would be fishy. And knowing the tax consequences for an individual seller and a company buyer, it wouldn't take rocket science to conclude that the transaction had been done to minimise the combined tax paid by the buyer and seller. The buyer/seller could try to take the position that what had been done was legal tax avoidance, but the fact that the transaction was done at a price that could be shown to be other than the going rate at the time would IMHO make it uncomfortably clear that it was tax evasion rather than avoidance. I'm no expert in such matters, and a qualified accountant or tax adviser might say someone could get away with doing this sort of thing, but I'd think the risk would be too high to be worth taking. But that's JMHO.
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duck
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Post by duck on Oct 20, 2016 4:54:59 GMT
I agree 100% with you mikes1531 not something anybody should ever consider or get involved in which is why I was rather loath to post 'details'. It is after all a requirement of Co directors to act in the best interests of the Co and I don't believe this is. Where HMRC would see the dividing line between acceptable and non acceptable I have no idea and I have no intent on finding out ...... That said if individual loan parts for sale couldn't be identified the 'problem' would go away. |
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Post by ravado on Oct 21, 2016 15:56:58 GMT
Changing the subject slightly but keeping with state of FS property loans: I see both South Wales property loans are finally 'unredeemed' and receivers called in. This is against a backdrop of lots of reassurances from FS that they would pan out OK. I now have five recent 'unredeemed' property loans and don't recall ever receiving any emails from FS pointing out the default or offering any comforting words. Communication is a massive issue with FS.
Edit: I've just checked the FS site and I have NOT signed up for loan update emails - so technically my fault. Obviously the default is no emails!
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spyrogyra
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Post by spyrogyra on Oct 21, 2016 21:23:36 GMT
So the conclusion is that the default position is default.
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r00lish67
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Post by r00lish67 on Oct 22, 2016 3:21:42 GMT
Really interesting discussion. Coming back full circle on this, after writing what I wrote in the OP I've actually quite changed my view I have to say. There's an awful lot of less desirable loans on the platform, but some really good low LTV loans that are listed on the SM at par or small discounts that aren't attractive to taxpayers but are to me. I had listened to people say you have to be very picky on FS, but hadn't really taken it to heart and started chasing all of those lovely seeming high % and cashback deals.
Hey, and M*** S***** (6712763837) looks like it might pay back after all....
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spyrogyra
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Post by spyrogyra on Oct 23, 2016 16:02:23 GMT
An extract from M*** S***** (6712763837) update reads:
"We have therefore held off on formal appointment although we have advised the solicitor that we were about to appoint a solicitor and that, in any event, penalty interest will apply."
My question is:
Is part of the penalty interest due to lenders?
And if not - why?
While the risk is with the lender, why would the platform pocket the penalty interest?
Isn't there a conflict of interest if the penalty interest goes to the platform only?
When does the platform apply penalty interest ? After the expiry of the original loan term or after defaulting the loan?
Finally, what % is the penalty interest?
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daveb4
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Post by daveb4 on Oct 24, 2016 6:19:33 GMT
Lets hope some of the outstanding loans over the last few months do pay up/complete this week as hoped (weekend updates), this will free up some cash to fill approx £3m of loans awaiting cash.
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littleoldlady
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Post by littleoldlady on Oct 24, 2016 11:22:30 GMT
Lets hope some of the outstanding loans over the last few months do pay up/complete this week as hoped (weekend updates), this will free up some cash to fill approx £3m of loans awaiting cash. Any cash I get back will leave the platform smartish and not go into any new loan.
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spyrogyra
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Post by spyrogyra on Oct 24, 2016 17:07:12 GMT
To return to the original subject the state of play with property loans.
For the last 48 hours the loans on the primary market attracted negligible amount of cash.
Below are some figures:
Everton (cashback) + 43000
Brough,Hull +11500
Dell2 (cashback) +21000
Plymouth + 15000
West Bromwich +200 only
New Ark +300 only
Wirral +1300 only
Whitehaven +1700 only
Bristol +150 only
Elena Maria +650 only
Suffolk + 225 only
Westbury +1150 only
Cardiff (new) +15650
The Dell ph 1 (cashback) +3300 only
Bradford on avon +6220
With this speed some loans would need many months to fill. Mind boggling.
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n
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Post by n on Oct 24, 2016 17:32:27 GMT
Yes, but then SS was launching a big one over the weekend.
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Post by bracknellboy on Oct 24, 2016 17:41:28 GMT
well with all but 2 of my 'positions' with FS now overdue none of these loans will be seeing any of my money. One of those is one I have a larg'ish position with. The end date was 15/10 and yet not until the 21st was an update put in saying they were meeting with the borrower next week to understand intent to redeem or renew.
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Neil_P2PBlog
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Post by Neil_P2PBlog on Oct 24, 2016 18:22:19 GMT
Interesting list spyrogyra. What happens to a loan if they can't manage to fund it completely? |
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