Peer-to-peer lending sites: MSE guide discussion

Zero_Sum

masonic wrote: »

As long as you'll still think P2P lending is great if you start to suffer capital losses, then there's nothing wrong about that. I'm happy to continue investing in P2P even though I've suffered some substantial losses - about a fifth of my capital is tied up in defaults so I don't know yet what my actual net return will be, but I suspect it will end up close to the 8% mark. However, past performance is no guide to the future and I'm fully prepared for the risk of future capital losses outstripping my returns.


P2P lending accounts are certainly not equivalent to savings accounts. There is no need to diversify savings unless you hold more than £85k with one organisation.

In the case of P2P you are investing, not saving. P2P is a high risk investment with 100% loss potential and no FSCS cover even in situations where you are defrauded. The risk profile is different between S&S and P2P. S&S investments are highly volatile and can fall in value very quickly, whereas P2P loans are not as readily tradeable, so are not very volatile, but can be subject to irrecoverable losses in a way that mainstream S&S investing is not.

Given that the safer P2P options are currently returning around the 5% mark, that you're expecting 8% even after substantual losses means they must have been fairly high risk ones.

Empor

Re this Kuflink/Ratesetter IFISA issue, how "hot" are HMRC on things like this?

The situation seems a bit complicated, for the small amount involved are they really going to chase it up?

fun4everyone

Empor wrote: »

Re this Kuflink/Ratesetter IFISA issue, how "hot" are HMRC on things like this?

The situation seems a bit complicated, for the small amount involved are they really going to chase it up?

I can assure you HMRC know absolutely everything about your and everybody elses ISA subscriptions and will be in contact in due course if you break the rules, even by a small amount.

It is not something to lose sleep over if you just do what they say when they contact you.

Nardge

jamesd wrote: »

Not according to the current version, so long as the total is still within the 20k. Go over and partial voiding can be used to remove the excess.

BTW there are special rules for the LISA: even if its subscription is later the money is taken from the earlier ISA instead.

Since you're still within the 20k just leave things as they are and the Kuflink subscription will be made valid. HMRC has been known to forgive minor errors with nothing more than a reminder about the rules or you just won't get tax free interest on the excess in Kuflink for a few months if they go the repair route instead, their choice to make.

You can safely add the 548 to Ratesetter with no issues. You could add it to Kuflink but that'd be more breaking of the rules and enough that you might go over the amount that HMRC will tolerate with no more than a reminder letter.

Thanks for your insight and guidance!

I'm assuming you meant I can add £405.42 (contrast £548) such that the total overall ISA Investment is £19,857.42?
(Care of erroneous £142.58 invested within Kuflink)…

With Kind Regards

masonic

Zero_Sum wrote: »

Given that the safer P2P options are currently returning around the 5% mark, that you're expecting 8% even after substantual losses means they must have been fairly high risk ones.

I don't think it can be assumed that there is a clear relationship between interest rate and risk in P2P. One must evaluate the risks based on the borrower and the asset. In the case of 'black box' investments, no assumption can be made that these are safer just because the rate is lower.

Rates have come down over the last couple of years, so where I was previously investing at 12-15% almost exclusively, I now have a some invested at 8-10% and a growing sum at 5-7% (though at these rates the risk:reward is borderline vs mainstream investment options), so moving forward my net returns are likely to decrease unless I become luckier.

jamesd

Nardge wrote: »

I'm assuming you meant I can add £405.42 (contrast £548) such that the total overall ISA Investment is £19,857.42? (Care of erroneous £142.58 invested within Kuflink)…

Total including the amount with Kuflink but excluding the flexibly withdrawn money from the other two places to be no more than 20k.

Nardge

jamesd wrote: »

Total including the amount with Kuflink but excluding the flexibly withdrawn money from the other two places to be no more than 20k.

I'm not sure how to read that unfortunately... So:

£500 cashback and £50 referral fee into Lending Crowd - already disinvested/corrected
£75 referral fee into Assetz Capital - already disinvested/corrected
£42.58 cashback and £100 referral fee into Kuflink - the ongoing headache

1) £20,000 (Overall allowance) - £142.58 (Kuflink) = £19,857.42

OR

2) £20,000 (Overall allowance) - £142.58 (Kuflink) - £75 (Assetz Capital) - £550 (Lending Crowd) = £19,232.42

Which is the correct interpretation?

With Kind Regards

jamesd

The total added to Ratesetter and Kuflink this tax year can be up to £20,000. Do not add more to Kuflink than you already have. This means that 1 is how much you can put into Ratesetter this year.

Nardge

Dear Masonic and Jamesd,

Many thanks for taking the time to guide me and minimise repercussions with HMRC

5th April is tomorrow, perhaps you'd know the approximate timeframe before HMRC get in touch? 1 month? 6 months?

To ensure all new IFISA/P2P ISA Forum users are clear, the moment 6th of April arrives, all 'new' or 'current' tax year ISA money will become classified as 'old' or 'previous' tax year ISA money, thus from the 6th such funds can be moved to other platforms, and in conjunction, if wished for, a new IFISA platform can be opened and funded with the new tax year's (2019/2020) ISA allowance.

With Kind Regards

masonic

It will probably be closer to 6 months than 1 month and might be even longer.