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Post by bracknellboy on May 4, 2014 16:57:08 GMT
If I remember correctly, FC said that Cashback was "an incitement to purchase" and was therefore not taxable. I think they also said that they had had approval from HMRC. It is a pity we lost the contents of the old Forum, there was a lot of useful stuff there. Should have said "an Inducement to Purchase" That is the 'opinion' given by FC on their website. I've posted the link in here before but can't recall where to find it. And agree with MRC: work on what the tax statement says from the site.
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Post by bracknellboy on May 4, 2014 17:08:51 GMT
I'd be interested to know what you mean by that. There is a part of SA which has always thrown me, am never sure I have got it right, and in the last few years have chosen to ignore it having I think concluded its not relevant. But I think we may be talking about the same thing. If HMRC sends a letter saying that they are adjusting your tax code to collect tax owed from a previous year the amount of money that they are trying to collect is given in the letter, in a "Tax calculation summary notes" section. That amount of tax owed from past years should be included in the tax return using the "Underpaid tax for earlier tax years included in your tax code for" current year box. If you choose option 6 View your calculation you will see that part way through there are entries "Income Tax charged" and "Underpaid tax ..." . Those two are added to get the total amount of tax due in the year. Ok, thanks. I suspected this was what you were referring to. In the past I've always been a bit flummoxed by the part of the return asking whether tax code included underpaid tax etc. My initial thought on that always used to be "well you should b*****y know, why are u asking ME ??" I think there have been some times in the fairly distant past where I've opted to have underpaid tax collected through subsequent PAYE, and got several headaches then working out what to fill in this section: not least 'cos it feels to me as if I get something like 3 coding notice changes every tax year. In fact I've just gone back through a pile and received 8 between Jan 2012 and Jan 2014. But I've not received the normal plethora of Feb and March ones this year for some reason (did my tax return early perhaps...).
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wysiati
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Post by wysiati on May 4, 2014 17:25:30 GMT
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spiral
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Post by spiral on May 4, 2014 18:00:22 GMT
That's very interesting. Zopa certainly consider it taxable and if its not, why don't all the P2Ps get us to lend at 0 % and give us a x% per annum cashback therefore negating the need for any taxable earnings.
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james
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Post by james on May 4, 2014 18:29:15 GMT
My initial thought on that always used to be "well you should b*****y know, why are u asking ME ??" ... not least 'cos it feels to me as if I get something like 3 coding notice changes every tax year. In fact I've just gone back through a pile and received 8 between Jan 2012 and Jan 2014. But I've not received the normal plethora of Feb and March ones this year for some reason (did my tax return early perhaps...). Yes, "you already know, fill it in for me" is my thought on that as well. Similar here on the notices of coding frequency though in my case part of that is from telling them about benefits in kind and untaxed income part way through the year, or from adjusting my expected income estimate.
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pikestaff
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Post by pikestaff on May 5, 2014 7:38:33 GMT
Whilst we're on the subject of tax does anyone have the definitive answer on whether "bonuses", "cash backs" etc are taxable income. I've seen posts on TC from "accountant" lenders that say they are taxable, and I think I've seen suggestions elsewhere, eg on this board that they aren't. Has anyone asked HMRC?  TC has never given cashback. I would be inclined to rely on FC's "non taxable" line on cashback, provided it is coming from the platform and not from the borrower and is not tied to a specific loan. With anything tied to a specific loan you need to be more careful. Taxable: anything that goes to all lenders on a loan. The principle is that if it goes to all lenders on a loan it must be part of the return on the loan, and taxable as such. Probably not taxable: early bidder bonuses, bonuses for large bids. The argument is that the loan without these bonuses is at a full commercial rate (as evidenced by the fact that some lenders will have lent without these bonuses), hence the bonuses can reasonably be regarded not as part of the return on the loan but as a non-taxable inducement.
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Post by mrclondon on Oct 4, 2014 10:28:35 GMT
I think we now have the first evidence that HMRC are actively considering whether P2x represents a source of underpaid tax. This morning ThinCats send a general news email out, which contained this: Of cource as most TC members know, this opens a real can of worms because the recently introduced tax statements simply aggregate items listed on the statement as interest, wheras there are a host of other corrections (+ & -) that need to be applied to compensate for the anomolies of the TC software. On the old TC forum, TC's md comments that the switch to new third party software in due course should remove most anomolies. My strategy with TC is to try to avoid those loans which are clearly going to have TC accounting problems from the outset, and then as per my post a few months ago: Best to just accept whatever the tax statement from the P2P site says, and then plead ignorance in the very unlikely event of it being queried by HMRC. But I'm an engineer not an accountant, and would probably be able to get away nothing worse than catching up on any underpaid tax as determined by HMRC.
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Post by parag on Oct 4, 2014 12:00:29 GMT
I think we now have the first evidence that HMRC are actively considering whether P2x represents a source of underpaid tax. This morning ThinCats send a general news email out, which contained this: Of cource as most TC members know, this opens a real can of worms because the recently introduced tax statements simply aggregate items listed on the statement as interest, wheras there are a host of other corrections (+ & -) that need to be applied to compensate for the anomolies of the TC software. On the old TC forum, TC's md comments that the switch to new third party software in due course should remove most anomolies. My strategy with TC is to try to avoid those loans which are clearly going to have TC accounting problems from the outset, and then as per my post a few months ago: Best to just accept whatever the tax statement from the P2P site says, and then plead ignorance in the very unlikely event of it being queried by HMRC. But I'm an engineer not an accountant, and would probably be able to get away nothing worse than catching up on any underpaid tax as determined by HMRC. We have also received a letter from HMRC asking for full disclosure of our lenders taxable earnings. They have indicated that we will need to provide this information to them sometime in the new year. We will be writing to our lenders in the coming weeks to inform them of this and make sure all are aware of their tax reporting obligations.
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james
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Post by james on Oct 5, 2014 2:07:47 GMT
If anyone hasn't reported income, just tell HMRC now, by phone or letter. At least for amounts in the hundreds of Pounds over a few years all they are likely to do is collect the tax that is due. Particularly so if you are not in the self-assessment system. The normal time limit by which you're supposed to tell HMRC about income is within six months of the end of the tax year in which you received it. If using Bondora remember that you're required to report foreign untaxed interest in addition to domestic untaxed interest. On the SA form you combine the two in one box and are suppose to make a note about how much is foreign in a general box at the end unless the interest is over £2,000, when you have to complete the foreign pages instead. You can use any reasonable exchange rate. For a few tens or hundreds of Pounds annual average exchange rate is probably good enough, or monthly. Once it gets to thousands you'd probably need to go to daily rates. Also remember that for foreign you have to report numbers for each country individually. For a careless failure to report (as opposed to having taken reasonable care or being deliberate) the HMRC penalty range is from 0-30% of the tax due. If they contact you first it's from 15-30%. Then they consider what you have done to help them. If you tell them first they can deduct 30% of that penalty, another 40% for helping them get the right numbers and another 30% for providing them full access to records. That can reduce the potential penalty by 100% of (30% - 0%) or 100% of (30%-15%). So get in fast with full disclosure and pay no penalty while you still can. |
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mikes1531
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Post by mikes1531 on Oct 5, 2014 23:27:41 GMT
I think we now have the first evidence that HMRC are actively considering whether P2x represents a source of underpaid tax. This morning ThinCats send a general news email out, which contained this: I think this is standard HMRC procedure, though possibly they're only getting around to it for some of the newer/smaller P2P platforms. IIRC, it was a year or two ago that Zopa told its members that they (Zopa) were under an obligation to provide to HMRC a statement of the income earned by each of their members.
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Post by batchoy on Oct 6, 2014 6:31:52 GMT
If anyone hasn't reported income, just tell HMRC now, by phone or letter. At least for amounts in the hundreds of Pounds over a few years all they are likely to do is collect the tax that is due. Particularly so if you are not in the self-assessment system. The normal time limit by which you're supposed to tell HMRC about income is within six months of the end of the tax year in which you received it. Six Months? Does mean the tens (hundreds?) of thousands of people who lend on ZOPA and FC need to do their tax returns three months earlier than the rest of the country or that they all need to send a letter or phone HMRC before yesterday? If you have never done a self-assessment tax return before, yesterday was the deadline for telling HMRC that you need to complete one for the 2013-14 tax year, not doing so leaves you open to fines. The easiest way notify HMRC is to go to their website and fill in the online form and apply for a Unique Tax Payer Reference which you then use for filling self-assessment forms. Due to the lead time currently being given by HMRC for issuing UTRs even if you had applied yesterday it will arrive too late for you to complete a paper return, the deadline for which is 31 st October and you will have to do it online by the deadline of 31 st January. Having recently done this for SWMBO it took a week for HMRC to acknowledge the form and then a further two weeks to get the UTR sent. Having reached this point you can then use your UTR to register for an account which takes another couple of weeks, only at this point are you are then in a position to complete the Tax return.
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james
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Post by james on Oct 8, 2014 0:59:27 GMT
No need to even register for SA for this unless it's over a couple of thousand pounds or there is foreign interest, any amount of which mandates SA. A phone call or letter even with a few years of combined disclosure will be fine and free of pain, other than having to pay the tax.
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Post by tybalt on Oct 8, 2014 13:36:12 GMT
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Post by valerieb on Oct 9, 2014 8:35:48 GMT
Thanks, tybalt - useful link.
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Post by mbwb88 on Oct 27, 2014 9:18:32 GMT
I’m confused – why is Funding Circle not asking their borrowers to deduct tax before paying lenders their interest/income.
I looked this topic up on HMRC and it states clearly “If your company or organisation pays interest, royalties, alternative finance payments, manufactured payments, relevant distributions or any similar recurring payment, you must generally make these payments after deducting Income Tax at the basic rate - currently 20 per cent”
That means if Funding Circle have brokered 200 million in loans that’s £40 million owed to the tax man and he will hardly ignore that. Can someone try to clarify this for me?
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