elliotn
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Post by elliotn on May 8, 2017 15:28:30 GMT
My guess would be rich tax payers abusing the system for tax avoidance, so we are now all punished #inittogether
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Post by resiak on May 8, 2017 15:41:41 GMT
I regard this as very bad news. It will substantially reduce the money I was planning to invest on the platform. It's important to me to know that I can sell out at short notice if I want to (this is the attraction of FS over other platforms such as Ly where I am running down my investment) - limiting the discount to 1% does not give me that comfort at all. When I started investing in FS a few weeks ago there were many loans where the market was at 1.25% discount and some were at 1.5%. Capping at 1% discount just means that the loans which go to the top of the list if the market is at 1% discount are those which were bought last (as these have the highest effective rate - so don't buy when a loan is listed - wait till its 90%+ funded!) FS has not offered a satisfactory explanation for what looks to me like a very bad move. In the last week everything with discount at 0.5%+ has gone within minutes so I believe 1% is more than enough at the moment.
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Post by mrclondon on May 8, 2017 15:51:59 GMT
Since the introduction of the ISA a few weeks ago, pricing at a 1% discount is throwing money away - I purchased big blocks of two of the three loans that were listed with a 1% discount at lunchtime today, and I'm now steadily re-selling within 5 hours I totally resold these at a 0.2% discount, a 0.8% profit for minimal risk.
FS have changed the premium/discount graduations several times since the SM has launched, and will no doubt change them again in the future if to do so would improve the functioning of the SM at that point in time. For now, with a block on trading on loans within 30 days of their notional maturity date, 1% limits on discount/premiums seem sensible to protect both buyers and sellers.
Personally I would like to see trading on overdue loans enabled which would of course necessitate discounts greater than 1%, not least to reflect the transfer of the tax liability to the buyer. Why ? To enable me to profit from sellers who fail to appreciate that secured loans are very likely to fully repay months/years late. However, in the context of protecting lenders, I suspect this will never be enabled.
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stub8535
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personal opinions only. Not qualified to advise on investment products.
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Post by stub8535 on May 8, 2017 16:27:35 GMT
This change is, as syated by @elliotm, largely due to the greedy few. It could also be self protection against HMRC fines as they can show they have tried to stop the gaming i to and out of the ifisa
I hope they "repair" identifiable breaches to help the ill advised rather than just report their actions. Not! Let the fools fry under the severe investigations of their affairs as they knew what they were doing.
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Liz
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Post by Liz on May 8, 2017 16:51:12 GMT
Someone is buying everything with a discount of 0.30% and over.
This change shouldn't affect things.
I too would like to see trading in defaulted loans, but it won't happen.
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dzo
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Post by dzo on May 8, 2017 17:59:25 GMT
Someone is buying everything with a discount of 0.30% and over. This change shouldn't affect things. I too would like to see trading in defaulted loans, but it won't happen. It seems something is afoot. I've sold loads of loan parts today. None of them at a discount, and several with premiums of 2-3 percent. It goes to show that FS are wrong when they say loan parts rarely sell at premiums higher than 1 percent. There will be a lot more loans that simply aren't available of the SM in future. Today's Jaguar E-Type will be the first. Normally I would have already listed it for 3 percent, but now I can't put it on the SM at all because it's worth more than the maximum premium.
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dzo
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Post by dzo on May 8, 2017 18:42:46 GMT
I've just sold part of an unremarkable 12% property loan for a 1% premium. If things continue like this FS will surely have to backtrack on limiting premiums to 1% unless they are aiming to have the sort of SM Lendy/SS used to have.
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Post by excalibur on May 8, 2017 18:59:41 GMT
I think at the moment many people have transferred in their cash ISAs and are buying any half decent loan parts with a discount and the better stuff at a slight premium. When all that ISA cash has been allocated in a few months time the 0.8%+ discounts should start building up again at which point I'd expect FS to reconsider reverting to 2%+.
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Post by mrclondon on May 8, 2017 19:12:19 GMT
I think at the moment many people have transferred in their cash ISAs and are buying any half decent loan parts with a discount and the better stuff at a slight premium. When all that ISA cash has been allocated in a few months time the 0.8%+ discounts should start building up again at which point I'd expect FS to reconsider reverting to 2%+. Yes, a very plausible scenario. I suspect though that redemptions of the bigger loans will in future have a noticable impact on the SM as ISA funds are effectively trapped inside FS and cannot be shifted to another platform on a whim. If FS continues to grow at the rate it has in the last 12 months, redemeptions will (by definition) become a more frequent occurence. It is going to be interesting to see where the new steady state of the SM ends up. For now I have decided against opening an IFISA at FS as the reduced level of discounting (currently) needed to sell loans means my strategy of selling at 4.5 months results in a low effective tax rate anyway.
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stevio
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Post by stevio on May 8, 2017 20:05:21 GMT
I think at the moment many people have transferred in their cash ISAs and are buying any half decent loan parts with a discount and the better stuff at a slight premium. When all that ISA cash has been allocated in a few months time the 0.8%+ discounts should start building up again at which point I'd expect FS to reconsider reverting to 2%+. Yes, a very plausible scenario. I suspect though that redemptions of the bigger loans will in future have a noticable impact on the SM as ISA funds are effectively trapped inside FS and cannot be shifted to another platform on a whim. If FS continues to grow at the rate it has in the last 12 months, redemeptions will (by definition) become a more frequent occurence. It is going to be interesting to see where the new steady state of the SM ends up. For now I have decided against opening an IFISA at FS as the reduced level of discounting (currently) needed to sell loans means my strategy of selling at 4.5 months results in a low effective tax rate anyway. May I ask if your using your ISA allowance elsewhere then?
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Post by mrclondon on May 8, 2017 20:20:42 GMT
stevio I have generally not been using my ISA (and before it PEP) allowance as I have preferred to channel all equity investment into my SIPP for the 40/45/50% upfront tax relief, and all cash investments into p2p. However, I now need to use the ISA allowances for the next 6 years to build up a large enough "ISA pot" to cover the 25% tax free withdrawal from the SIPP (so I maintain that portion of my equity investment in a tax free wrapper). It's therefore my intention to open IFISA's for the next few years, but recognizing the difficulties in moving IFISA's between platforms if they contain untradeable loans, I'm in no hurry to use this years allowance. Whilst there is an argument for having the IFISA with a platform with predominately 11/12% loans (FS/MT/L/ABL) there is also an argument for having the ISA with a platform that you are pretty much guaranteed to be 100% invested 365 days of the year (AC for example) but at a slightly lower rate / lower risk profile (remembering that outside of the ISA capital losses can be used to offset inetrest for tax purposes. EDIT: In a slightly wider, less personal context, my belief is ISA allowances are too valuable to be used for cash / debt investments which by definition have zero capital gains.
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stevio
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Post by stevio on May 9, 2017 6:23:04 GMT
stevio I have generally not been using my ISA (and before it PEP) allowance as I have preferred to channel all equity investment into my SIPP for the 40/45/50% upfront tax relief, and all cash investments into p2p. However, I now need to use the ISA allowances for the next 6 years to build up a large enough "ISA pot" to cover the 25% tax free withdrawal from the SIPP (so I maintain that portion of my equity investment in a tax free wrapper). It's therefore my intention to open IFISA's for the next few years, but recognizing the difficulties in moving IFISA's between platforms if they contain untradeable loans, I'm in no hurry to use this years allowance. Whilst there is an argument for having the IFISA with a platform with predominately 11/12% loans (FS/MT/L/ABL) there is also an argument for having the ISA with a platform that you are pretty much guaranteed to be 100% invested 365 days of the year (AC for example) but at a slightly lower rate / lower risk profile (remembering that outside of the ISA capital losses can be used to offset inetrest for tax purposes. EDIT: In a slightly wider, less personal context, my belief is ISA allowances are too valuable to be used for cash / debt investments which by definition have zero capital gains. Me too pension first, but I also want some funds available now I may regret using this year's allowance but should still keep what funds used for ISA fully invested Interested to hear what capital gains you feel of more value in an ISA?
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Post by dan1 on May 9, 2017 8:31:54 GMT
I think FS would admit that the limiting of the premium/discount to 1% is a fudge. I hope it's a short term measure to give their coders time to implement a longer term solution to stop people trading between taxable and ISA accounts (including those of their partners) - i.e. to remain HMRC compliant.
Am I the only one who sees this leading to a par only SM, at least in the short term? Put it this way, HMRC breaches are still taking place just to a lesser extent. Perhaps they'll close the SM for a period of time?
The SM has shifted a good 0.5-0.75% to the premium on all assets, so limiting to 1% discount makes no difference but 1% premium will cut out a lot of potential trades. Sparkly stuff does sell at 3% premium regularly. I do find it odd that people buy at such high premiums, I've sold 10% loans at 105% over on ABL to give the buyer an AER less than 5% - is that really a good risk adjusted return?
Crazy times
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Post by excalibur on May 9, 2017 9:09:01 GMT
I think FS would admit that the limiting of the premium/discount to 1% is a fudge. I hope it's a short term measure to give their coders time to implement a longer term solution to stop people trading between taxable and ISA accounts (including those of their partners) - i.e. to remain HMRC compliant. Am I the only one who sees this leading to a par only SM, at least in the short term? Put it this way, HMRC breaches are still taking place just to a lesser extent. Perhaps they'll close the SM for a period of time? The SM has shifted a good 0.5-0.75% to the premium on all assets, so limiting to 1% discount makes no difference but 1% premium will cut out a lot of potential trades. Sparkly stuff does sell at 3% premium regularly. I do find it odd that people buy at such high premiums, I've sold 10% loans at 105% over on ABL to give the buyer an AER less than 5% - is that really a good risk adjusted return? Crazy times I think people willing to do the 5% returns on jewellery (which is probably the easiest to recoup on default) so they can capture the automatic renewals at full rate - and after all 5% is better than nothing for unallocated cash. What I'd like to see is FS cutting the premium to zero - to reduce speculators who don't intend holding to maturity.
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sqh
Member of DD Central
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 May 9, 2017 12:19:36 GMT
I think FS would admit that the limiting of the premium/discount to 1% is a fudge. I hope it's a short term measure to give their coders time to implement a longer term solution to stop people trading between taxable and ISA accounts (including those of their partners) - i.e. to remain HMRC compliant. Am I the only one who sees this leading to a par only SM, at least in the short term? Put it this way, HMRC breaches are still taking place just to a lesser extent. Perhaps they'll close the SM for a period of time? The SM has shifted a good 0.5-0.75% to the premium on all assets, so limiting to 1% discount makes no difference but 1% premium will cut out a lot of potential trades. Sparkly stuff does sell at 3% premium regularly. I do find it odd that people buy at such high premiums, I've sold 10% loans at 105% over on ABL to give the buyer an AER less than 5% - is that really a good risk adjusted return? Crazy times I really don't see why you shouldn't be allowed to buy and sell to yourself within an ISA, other than it can be used to boost your ISA Allowance. If boosting your IFISA Allowance is the concern, then that is covered by CGT. This is recorded in your account information - secondary market (net) figure. If at the end of the tax year it is positive, you will have a CGT charge, but you currently have an annual exemption allowance of £11,300. It would take an enormous amount of self-trading to take this figure over your annual CGT allowance. Then also consider you are likely to incur some losses inside your IFISA. These losses should also be used to reduce any CGT net gains.
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