Post by james on Feb 5, 2017 13:40:42 GMT
Since I expect to be making interest in the tens of thousands the tax is of interest to me. The way FS pays interest at the end is what opens up the opportunity for more tax saving than at Ablrate, it's a very interesting feature. Not using them yet, though, on my to do list.
Want 10% tax free for a while?
While on the subject of them, Ablrate has a couple of new loans with around £150k still available where Ablrate are paying 10% in instant returns. Those are paid whether the loan fills or not so they are not interest but a fee that should be treated as a purchase price discount. That means potential capital gain when selling if the loan fills but for most of us that means tax free. You still need to allow for the taxable interest earned if you want to sell later but it's an interesting thing to know. The holdings will probably be fairly slow to sell. The instant returns stop accruing when the loan money is paid to the borrower so how long you get this possibly tax free money depends on how long it takes the loans to fill. Could be only a few days if the whole £150k was filled today.
For those who have a reason to do tax optimising the fact that Ablrate often does offer instant returns like this can be good to know. Even when ISAs are around the risk is lower than lending because the money has to be kept in a client money account, not exposed to borrower risk.
Want 10% tax free for a while?
While on the subject of them, Ablrate has a couple of new loans with around £150k still available where Ablrate are paying 10% in instant returns. Those are paid whether the loan fills or not so they are not interest but a fee that should be treated as a purchase price discount. That means potential capital gain when selling if the loan fills but for most of us that means tax free. You still need to allow for the taxable interest earned if you want to sell later but it's an interesting thing to know. The holdings will probably be fairly slow to sell. The instant returns stop accruing when the loan money is paid to the borrower so how long you get this possibly tax free money depends on how long it takes the loans to fill. Could be only a few days if the whole £150k was filled today.
For those who have a reason to do tax optimising the fact that Ablrate often does offer instant returns like this can be good to know. Even when ISAs are around the risk is lower than lending because the money has to be kept in a client money account, not exposed to borrower risk.