Peer to Peer Syndicate

Emmet

I have been for a months now using funding circle on a learning curve, this has now attracted a few friends and work mates to start showing an interest in the idea. The restricted amount of extra cash they have spare and or the amount they are prepared to invest has lead to the idea of a peer to peer lending syndicate idea.


I understand the syndicate principles, syndicate agreement need and possible need for a deed of trust etc.


What are if any the legal restriction, tax related issue or pitfalls that may arise. Can anyone shed light on any of these issues.

mikb

Check the T&Cs of the companies you plan to lend with.

Usually they insist that you are lending YOUR OWN money, as a personal lender, resident in the UK etc. etc.

The alternative is to lend as a limited company, but if you set up an SPV (Single Purpose Vehicle) for the purpose of this lending, then lending money will be your main activity, and you will be probably need a credit licence, and it all gets messier still.

Syndicates usually end in tears anyway, are you REALLY sure you want to do that ?

There's no problem with putting small amounts of money into P2P lending, ZOPA and Ratesetter start at £10, Funding Circle at £20. But...

For diverfisci ... divisif ... spreading the risk, you may want to start with a bigger sum, is that the idea? So that you don't have the problem of £40 in, 2 loans made, 1 goes into default the next week ?

oldlil

I've been investing through Funding Circle for several months and so far no nasty surprises. Minimum payment in is £100, suggest cautious investor picks only A+B risks and spreads the investment into £20.00 units.
I understand that the government are considering regulating P2P lending- am sure they'll come up with some idea to tax any benefits!
Above all accept it is non guaranteed so no good whingeing if things go wrong. However I have read that this site's founder is a keen P2P investor.

mikb

oldlil wrote: »

and so far no nasty surprises.

I understand that the government are considering regulating P2P lending- am sure they'll come up with some idea to tax any benefits!

However I have read that this site's founder is a keen P2P investor.

1) No nasty surprises *yet*, good for you. Do let us know when the first A risk goes pop. I predict it will be before a B goes pop. That's the weird thing about credit bands, sometimes they're just made up on the back of a fag packet.

2) Regulated or not, you already should be declaring your P2P income if it takes you over your personal allowance. It is already taxed. If you haven't declared it, no worries, as all the P2P companies report direct to HMRC so they'll be waiting for your explanation and grovelling apology

3) He's a fan of it NOW ... now lots of people are at it. I remember it being more bargepole-worthy back a few years ago, and certainly not "recommended" -- not that he would really stick his neck out and "recommend" something a little bit risky -- it could go wrong. Unlike IceSave, which was totally solid. Ahem.

badger09

mikb wrote: »

2) Regulated or not, you already should be declaring your P2P income if it takes you over your personal allowance. It is already taxed.

Missing a 'not' here.

bowlhead99

badger09 wrote: »

Missing a 'not' here.

What he/she means is, the activity is already taxed: as in, the government already taxes interest income on loans. Nobody needs to come up with "some idea to tax any benefits" because the concept that you owe tax on any returns from your lending has been fully in place since the days when HMRC was called Inland Revenue and perhaps before that.

The activity is already taxed so they don't need to bring in a new tax. He/she wasn't suggesting whether or not the receipts you get have suffered tax when you get them.

mikb

bowlhead99 wrote: »

What he/she means is, the activity is already taxed: /QUOTE]

He (me) !

Yes that's exactly what I meant.

Just like interest on savings accounts, you have to pay tax on it. Subject to personal allowances, etc etc.

Unlike interest on savings accounts, it is not taxed at source, it's up to you to declare manually/self assessment or otherwise!