elliotn
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Post by elliotn on Apr 21, 2017 2:24:00 GMT
Presumably a loan part bought historically on the standard account would not qualify as subsequently being purchased on the open market at the time of qualification for the tax free status if just transferred between an owner's accounts?
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elliotn
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Post by elliotn on Apr 21, 2017 3:27:35 GMT
With renewals will we be offered the choice of renewing to our main account or to our IFISA account? With some loans I would prefer to renew to my IFISA account and others to my main account.
Bit more detail - FS may not allow you to renew to your tax free account if that is deemed sanctioning tax avoidance ie 6.14 (a) forbids acquiring investments from the investor ie yourself: 6.14 For any acquisition of investments in an ISA, the conditions that must be satisfied are as follows. (a) The investments must not be purchased from the investor, or from the investor’s spouse or civil partner. (b) The investments must be bought at the open market price (paragraph 10.7).
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mason
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Post by mason on Apr 21, 2017 6:54:18 GMT
Bit more detail - FS may not allow you to renew to your tax free account if that is deemed sanctioning tax avoidance ie 6.14 (a) forbids acquiring investments from the investor ie yourself: 6.14 For any acquisition of investments in an ISA, the conditions that must be satisfied are as follows. (a) The investments must not be purchased from the investor, or from the investor’s spouse or civil partner. (b) The investments must be bought at the open market price (paragraph 10.7). Which terms are those? I don't recall seeing this when signing up for my ISA, although I might have missed it. The text doesn't appear to feature at all here: www.fundingsecure.com/terms-and-conditions
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SteveT
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Post by SteveT on Apr 21, 2017 7:08:57 GMT
Bit more detail - FS may not allow you to renew to your tax free account if that is deemed sanctioning tax avoidance ie 6.14 (a) forbids acquiring investments from the investor ie yourself: 6.14 For any acquisition of investments in an ISA, the conditions that must be satisfied are as follows. (a) The investments must not be purchased from the investor, or from the investor’s spouse or civil partner. (b) The investments must be bought at the open market price (paragraph 10.7). Which terms are those? I don't recall seeing this when signing up for my ISA, although I might have missed it. The text doesn't appear to feature at all here: www.fundingsecure.com/terms-and-conditionsGoogle locates that text here, which appears to be an HMRC guidance document to ISA managers: www.tisa.uk.com/downloads/ISA%20GN%20April%202016%20final%20version.doc6.14(a) certainly appears to suggest that fundingsecure should not be permitting lenders to re-buy their own parts into their IFISA account from their non-IFISA account.
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IFISAcava
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Post by IFISAcava on Apr 21, 2017 7:28:24 GMT
But if you put on the open market then buy it, technically you aren't transferring to yourself are you? Everyone has a chance to buy it (if their fingers are quick enough).
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mason
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Post by mason on Apr 21, 2017 7:35:28 GMT
Thanks, that's also in the current ISA guidance notes. Mistook this for a FS condition in the context it was quoted. This is under the section "Generation of a cash subscription by the disposal of existing investments", so would seem to preclude a sale-subscription-repurchase sequence, but perhaps not a purchase of one's own investments listed on the market using cash already subscribed.
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ilmoro
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Post by ilmoro on Apr 21, 2017 7:41:04 GMT
section 10.5 is the relevant part in the guidance. 10.8 is also relevant as it defines market price as being price that might reasonably expected in the open market, therefore effectively banning sales at exaggerated discount or premium.
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SteveT
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Post by SteveT on Apr 21, 2017 7:54:35 GMT
Thanks, that's also in the current ISA guidance notes. Mistook this for a FS condition in the context it was quoted. This is under the section "Generation of a cash subscription by the disposal of existing investments", so would seem to preclude a sale-subscription-repurchase sequence, but perhaps not a purchase of one's own investments listed on the market using cash already subscribed. For me, that fails the "basic common sense" test. It would theoretically enable someone to transfer £20,000 of their own loans into their IFISA by depositing only, say, £100 of new cash into the new IFISA account, then buying £100 of their own loans, transferring the sale proceeds into the IFISA and repeating. Is that likely to be what HMRC meant to permit? A fairly clear "No", IMO. Another "common sense" test: Is any other P2P platform permitting (or suggesting that they will permit, once they are IFISA-authorised) their lenders to transfer or sell & re-buy their existing loans into their IFISA? Another "No", AFAIK.
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IFISAcava
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Post by IFISAcava on Apr 21, 2017 7:59:21 GMT
Thanks, that's also in the current ISA guidance notes. Mistook this for a FS condition in the context it was quoted. This is under the section "Generation of a cash subscription by the disposal of existing investments", so would seem to preclude a sale-subscription-repurchase sequence, but perhaps not a purchase of one's own investments listed on the market using cash already subscribed. For me, that fails the "basic common sense" test. It would theoretically enable someone to transfer £20,000 of their own loans into their IFISA by depositing only, say, £100 of new cash into the new IFISA account, then buying £100 of their own loans, transferring the sale proceeds into the IFISA and repeating. Is that likely to be what HMRC meant to permit? A fairly clear "No", IMO. How are 'bed and ISA" rules interpreted? There's a parallel i suppose, in that you may well end up with the same shares you sold rewrapped.
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SteveT
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Post by SteveT on Apr 21, 2017 8:08:35 GMT
How are 'bed and ISA" rules interpreted? There's a parallel i suppose, in that you may well end up with the same shares you sold rewrapped. Under "Bed & ISA" rules on selling and re-buying publicly-quoted shares and unit trusts / OEICs / ETFs, you are most unlikely to end up with your "own" shares and you have no control over the market price at the point you sell or re-buy. You certainly cannot offer to sell your own shares at your own chosen price and then select those very same shares to buy back in your ISA.
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elliotn
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Post by elliotn on Apr 21, 2017 8:16:06 GMT
But if you put on the open market then buy it, technically you aren't transferring to yourself are you? Everyone has a chance to buy it (if their fingers are quick enough). If you manipulate the premium or discount to prejudice your own repurchase that may not qualify although I was replying to dolphin's request to renew taxable loan parts into her tax free account which would not have passed through an open market (at most only when she made the taxable purchase in the first instance).
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IFISAcava
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Post by IFISAcava on Apr 21, 2017 8:23:30 GMT
But if you put on the open market then buy it, technically you aren't transferring to yourself are you? Everyone has a chance to buy it (if their fingers are quick enough). If you manipulate the premium or discount to prejudice your own repurchase that may not qualify although I was replying to dolphin's request to renew taxable loan parts into her tax free account which would not have passed through an open market (at most only when she made the taxable purchase in the first instance). Agreed. But it might not be your repurchase - others may benefit from a generous discount. There is an appreciable market risk that (arguably) means you are exposed and it isn't a simple transfer. I'm not expert and i agree on the face of it if asked and if big sums HMRC might take a dim view.
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mason
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Post by mason on Apr 21, 2017 9:14:37 GMT
Thanks, that's also in the current ISA guidance notes. Mistook this for a FS condition in the context it was quoted. This is under the section "Generation of a cash subscription by the disposal of existing investments", so would seem to preclude a sale-subscription-repurchase sequence, but perhaps not a purchase of one's own investments listed on the market using cash already subscribed. For me, that fails the "basic common sense" test. It would theoretically enable someone to transfer £20,000 of their own loans into their IFISA by depositing only, say, £100 of new cash into the new IFISA account, then buying £100 of their own loans, transferring the sale proceeds into the IFISA and repeating. Is that likely to be what HMRC meant to permit? A fairly clear "No", IMO. Another "common sense" test: Is any other P2P platform permitting (or suggesting that they will permit, once they are IFISA-authorised) their lenders to transfer or sell & re-buy their existing loans into their IFISA? Another "No", AFAIK. I think it is clear that the regulations do not permit the platform to provide a service in which loan parts can be transferred to an ISA, which would bypass them being made available on the market. What is being described above is a series of disposals by the investor via the market allowing the investor to incrementally Bed & ISA their holdings. In this case (unlike S&S investments) there is no market maker buying from you when you sell and selling to you when you buy, so the transaction is direct. This is a novel situation, predated by the general section of the guidance notes, so those general conditions were never designed to be applied to this situation - so the answer probably lies elsewhere. As ilmoro has pointed out, there are specific terms preventing the manager buying investments from the investor to facilitate bed & ISA, and purchases within the ISA must be at a reasonable market price. There is no specific guidance for managers around investors buying their own loans within the ISA, but that is probably beyond the scope of the document. I may peruse the legislation later to see if there is anything relevant there.
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09dolphin
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Post by 09dolphin on Apr 21, 2017 12:34:23 GMT
With my stocks and shares ISA I have to sell shares and then buy them back to get the ISA wrapper, paying associated costs to the broker. Mostly the actual cost of the shares are basically the same, sometimes a little more and sometimes a little less.
I think I'll set my alarm for about 2am each night next week and list loan parts for sale and then buy them back in the ISA wrapper.
I have asked if the loan parts I paid for in my main account that haven't been activated can be transferred into my IFISA account. The answer is "no" so, as soon as I can sell them, guess what I'm going to do?
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SteveT
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Post by SteveT on Apr 21, 2017 12:58:22 GMT
Might be worth reading Chapter 17 of the HMRC ISA guidelines (about ISA inspections and the actions that are taken when breaches are found) before doing so. I've not decided whether to open a FS IFISA yet but I'll certainly not be doing so until either FS are clearly operating within the ISA rules or else the ISA Helpline confirms that there's no risk of such transactions leading to FS IFISAs being voided.
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