Tax confusion | P2P Independent Forum

thewizard

Posts: 12

Likes: 5

Tax confusion Aug 25, 2017 14:27:17 GMT

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Post by thewizard on Aug 25, 2017 14:27:17 GMT

Hi,

I've been thinking that I have a limit of £1,000, for basic tax payer to earn in P2P and bank interest before I have to pay tax.

I phoned up HMRC and they said no it's £1,000 for bank interest and as P2P comes under Capital Gain I have £11,300 to earn before I am taxed, so if I could potentially earn up to £940 extra a month, tax free.

Is this correct or did they or I misunderstand them?

Thanks

corriefan

Posts: 16

Likes: 9

Tax confusion Aug 25, 2017 14:34:19 GMT via mobile

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Post by corriefan on Aug 25, 2017 14:34:19 GMT

I thought P2P income had to be declared as interest. That's what I did and ended up paying tax on it as my total interest was over £1000. If I should have declared it as capital gains I would have avoided paying tax. Interested to hear more...

alender
Member of DD Central

Posts: 985

Likes: 687

Tax confusion Aug 25, 2017 14:39:00 GMT

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Post by alender on Aug 25, 2017 14:39:00 GMT

Aug 25, 2017 14:34:19 GMT corriefan said:

I thought P2P income had to be declared as interest. That's what I did and ended up paying tax on it as my total interest was over £1000. If I should have declared it as capital gains I would have avoided paying tax. Interested to hear more...

P2P interest falls into interest payments for HMRC so you have a £1000 allowance for standard rate tax payers, £500 for higher rate tax payers and up to an additional £5000 if you have a combined low salary and pension income.

Capital gains tax and therefore capital gains tax allowance will only come into play if you sell you loans.

thewizard

Posts: 12

Likes: 5

Tax confusion Aug 25, 2017 15:11:02 GMT elephantrosie likes this

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Post by thewizard on Aug 25, 2017 15:11:02 GMT

Ok so perhaps thats why FC don't include the premium when selling loans in the tax report.

I think the HMRC person was getting confused with selling the loans as I was asking what happens when you sell the loans but I did keep saying so P2P is capital gains and she kept saying yes