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Post by solicitorious on Dec 5, 2016 17:53:56 GMT
as the January deadline looms, can anyone summarise which bits of our transactions are taxable?
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Post by solicitorious on Dec 5, 2016 18:18:56 GMT
No, I hadn't... Thanks. Although I've just lost the will to live, reading it. Can anyone simplify it?
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guff
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Post by guff on Dec 5, 2016 18:19:03 GMT
And today's e-mail: "We are also working on a few updates to the platform in addition to those that have been added this week. One of those now live is the 'Download History; button. This will allow you to download your financial history into a CSV file. We are working on filters so this data can be extracted to provide reports and tax statements etc."
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SteveT
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Post by SteveT on Dec 5, 2016 18:42:01 GMT
No, I hadn't... Thanks. Although I've just lost the will to live, reading it. Can anyone simplify it? In essence: 1) Individuals are liable to income tax on interest earned for the period that they own the loan (so not on accrued interest they pay for when buying on the SM) 2) SM premiums and discounts should be regarded as capital gains or losses as appropriate 3) Similarly, instant returns should be regarded as a capital gain (ie. as a discount off the initial capital paid when the loan draws down)
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david42
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Post by david42 on Dec 6, 2016 0:23:17 GMT
In essence: 1) Individuals are liable to income tax on interest earned for the period that they own the loan (so not on accrued interest they pay for when buying on the SM) Individuals are liable to income tax on the accrued interest they receive when selling on the SM. To quote from What is the tax position " Where a seller of loans receives interest, paid by the incoming buyer for a sale, for the period within the month, that interest would attract tax as per the normal interest on a primary trade." I have yet to discover the accurate way to calculate my taxable interest from the figures Ablrate publishes in the investment history. It is complicated because Ablrate makes a charge when a bid is placed as well as a charge when the bid is later accepted.
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james
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Post by james on Dec 6, 2016 2:17:39 GMT
david42, I don't think you were disagreeing about accrued interest. The original post was about accrued interest paid when buying, not received when selling, I think. Just to confirm what you wrote, though, I put these values into a spreadsheet each month: 1. interest 2. accrued interest received when selling 3. accrued interest paid when buying 4. HMRC reportable taxable interest = 1 + 2 - 3 5. instant returns not reported to HMRC for income tax, but tracked so I know what's happening. For many people this makes instant returns a particularly good deal for income tax, worth more than the ongoing interest on the loan. An extra bit of tax incentive to get in early. Of course if you have CGT to deal with later instant returns will be a factor in that and you might ultimately pay tax if it helps to produce a gain over the CGT allowance. For those who want to know how to more easily pick up the values, here are the formula I use in Excel to pick the numbers up from the Ablrate statements online: Accrue interest on sales =+IF($B2630="Accrued Interest",$C2630,"") Instant returns =+IF($B2630="Instant returns",$C2630,"") $B2630 is the Type column in the Ablrate account. $C2630 is the Amount. No formula for accrued interest on buys because it hasn't historically been given on its own line, so you have to pick it out of other sources like the emails and put it in by hand, if you're fortunate enough to have the email and the amount seems sensible, which it quite often hasn't been when one buyer purchases from multiple sellers in the same transaction. That makes accrued interest paid on buying the most fiddly of the numbers to manage.
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SteveT
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Post by SteveT on Dec 6, 2016 7:42:38 GMT
In essence: 1) Individuals are liable to income tax on interest earned for the period that they own the loan (so not on accrued interest they pay for when buying on the SM) Individuals are liable to income tax on the accrued interest they receive when selling on the SM. That's right, because any accrued interest sold was earned in the period that they owned the loan.
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Post by adspence on Dec 6, 2016 8:50:31 GMT
3. accrued interest paid when buying No formula for accrued interest on buys because it hasn't historically been given on its own line, so you have to pick it out of other sources like the emails and put it in by hand, if you're fortunate enough to have the email and the amount seems sensible, which it quite often hasn't been when one buyer purchases from multiple sellers in the same transaction. That makes accrued interest paid on buying the most fiddly of the numbers to manage. So you are effectively saying that unless you have the emails there is no way to figure out #3 oneself. It isn't just fiddly, it's impossible. We really need help from the platform here, they need to put these numbers in the downloadable statements.
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blender
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Post by blender on Dec 6, 2016 10:11:25 GMT
david42 , I don't think you were disagreeing about accrued interest. The original post was about accrued interest paid when buying, not received when selling, I think. Just to confirm what you wrote, though, I put these values into a spreadsheet each month: 1. interest 2. accrued interest received when selling 3. accrued interest paid when buying 4. HMRC reportable taxable interest = 1 + 2 - 3 5. instant returns not reported to HMRC for income tax, but tracked so I know what's happening. For many people this makes instant returns a particularly good deal for income tax, worth more than the ongoing interest on the loan. An extra bit of tax incentive to get in early. Of course if you have CGT to deal with later instant returns will be a factor in that and you might ultimately pay tax if it helps to produce a gain over the CGT allowance. For those who want to know how to more easily pick up the values, here are the formula I use in Excel to pick the numbers up from the Ablrate statements online: Accrue interest on sales =+IF($B2630="Accrued Interest",$C2630,"") Instant returns =+IF($B2630="Instant returns",$C2630,"") $B2630 is the Type column in the Ablrate account. $C2630 is the Amount. No formula for accrued interest on buys because it hasn't historically been given on its own line, so you have to pick it out of other sources like the emails and put it in by hand, if you're fortunate enough to have the email and the amount seems sensible, which it quite often hasn't been when one buyer purchases from multiple sellers in the same transaction. That makes accrued interest paid on buying the most fiddly of the numbers to manage. This looks right to me, not being troubled by CGT. What I would like to know from Ablrate is the calculation behind last 12 months' interest earned (my apostrophe) on the dashboard because a snapshot of that at tax year end is what I report. There should be a little question mark beside those interest-earned numbers to explain what it is. Is it not 1+2-3? There is no way we should be expected to re-create 3 from emails. Agreed about the tax-efficiency of instant returns - it is like FC's old cash back and very useful for keeping out of higher rates. Of course for 2016-7 there is the small problem of losses and perhaps Ablrate will try to do the whole reporting update in one go.
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SteveT
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Post by SteveT on Dec 6, 2016 10:17:23 GMT
I believe it's simply the interest earned whilst you owned the loans. Any accrued interest that you pay a seller for is netted off that loan's next scheduled payment of interest, so you're credited with just the period you own it.
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Post by ablrate on Dec 6, 2016 10:25:33 GMT
Thanks guys will take a look at these, especially the accrued interest figure not being reported separately.
If you have any preferred way you would like us to report the tax statement, do let us know. e.g. do you want it as a report or raw csv data that is downloadable in a spreadsheet (or both!).
Regards Ablrate
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blender
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Post by blender on Dec 6, 2016 10:55:43 GMT
I think the tax report provided by Funding Circle is excellent; a shame about the loans offered. No need to reinvent the wheel but of course there are differences.
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SteveT
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Post by SteveT on Dec 6, 2016 11:16:12 GMT
I agree that FC's version is a good model to follow. Happy to send you a (redacted) example if you've not seen it.
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blender
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Post by blender on Dec 6, 2016 11:29:10 GMT
I believe it's simply the interest earned whilst you owned the loans. Any accrued interest that you pay a seller for is netted off that loan's next scheduled payment of interest, so you're credited with just the period you own it. Thanks SteveT, that is helpful and you may be right. However, my point is that it needs an on-site authoritative statement of what it is from Ablrate before we can know if it is appropriate for our individual tax returns. My view is that number should be the interest received in the last 12 months and chargeable to income tax. Else what is the point of the 12 month figure? Of course there is the problem that you have to capture it at the right time, and clearly a facility to enter start and finish dates to provide a calculation for any period would be a better part of a proper report. For myself, a simple income tax payer, I have used the last 12 months figure for 2015-16, done and dusted, and I will have to make any corrections if I need to. But that will only happen if Ablrate report a different number to HMRC. Life's too short to be going through emails and creating spreadsheets.
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stevio
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Post by stevio on Dec 6, 2016 11:36:38 GMT
I believe it's simply the interest earned whilst you owned the loans. Any accrued interest that you pay a seller for is netted off that loan's next scheduled payment of interest, so you're credited with just the period you own it. Thanks SteveT, that is helpful and you may be right. However, my point is that it needs an on-site authoritative statement of what it is from Ablrate before we can know if it is appropriate for our individual tax returns. My view is that number should be the interest received in the last 12 months and chargeable to income tax. Else what is the point of the 12 month figure? Of course there is the problem that you have to capture it at the right time, and clearly a facility to enter start and finish dates to provide a calculation for any period would be a better part of a proper report. For myself, a simple income tax payer, I have used the last 12 months figure for 2015-16, done and dusted, and I will have to make any corrections if I need to. But that will only happen if Ablrate report a different number to HMRC. Life's too short to be going through emails and creating spreadsheets.
Good luck then should you get inspected by HMRC.....
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