Failed to declare small amount of P2P earnings. What should I do now?

jennyjj

coyrls wrote: »

Yes, I understand but they still don't want people sending in their P60s, as they do have access to that information. You're right that they may not routinely cross reference data but they are able to if they choose to take an interest, that's why I used the word "access"; it's there if they want to get it.

Not disagreeing with you. They can access lots of stuff. I was just pointing out that:-
1. They don't have clear, automatic and immediate access to a great deal of data. E.g. my limited company never did tell them who dividends went to and HMRC never asked: So no immediate data source.
2. Even if the had total data fed from p2p lenders, HMRC would expend very little energy matching that to personal tax records.

bigadaj

aroominyork wrote: »

Is tax payable in the year it is earned or the year it is received? I have just loaned through a one year p2p Ratesetter so (unless it is redeemed early) I will receive the interest in 2018-19. Does I have to declare anything this financial year, or only next year?

The year it's received. Multi year accounts or products can get complicated as interest can accrue annually in for example a three year savings bond, then you might have to pay tax if interests is credited but not accessible.

bowlhead99

bigadaj wrote: »

The year it's received.

Yep

Multi year accounts or products can get complicated as interest can accrue annually in for example a three year savings bond, then you might have to pay tax if interests is credited but not accessible.

To be picky, i think that's true until you said "...but not accessible". If it's not at all possible to access the funds, they are not taxable income which for an individual is when the interest is paid/made available. If the interest was just notionally deposited into an account controlled by and locked by the bank to which you have no right of access, then you don't need to pay tax. It's income that you would recognise as "accrued" if you were preparing a personal balance sheet, but is not really "paid".

The confusion arises when you have something like a 3 year savings bond from NS&I or a high street bank that credits the income each year but only lets you draw it out penalty free by waiting until the end of the three years. If you can pay them a penalty charge or administrative fee and walk away with your money, then it *has* been made available to you: your money is accessible and you can take it and move on. Which means you need to pay tax because you've earned the income and had it made available to you.


For aroominyork with their one year loan where a borrower is not making monthly interest payments and will only clear the interest with one bullet payment at the end (I'm assuming that's what they're describing; I don't have a ratesetter product myself) then the interest is not going to be taxable until the 18/19 tax year. Unless -as they suggest- the borrower can simply repay early giving them a risk that they get extra taxable current year income and have some undeployed capital.

qwerty1235

Wow. I love this forum!

You have all been extremely helpful. I learned so much.

I'm going to send HMRC a letter this week to declare the earnings from 2015-2016.

Thank you all!

bigadaj

bowlhead99 wrote: »

Yep

To be picky, i think that's true until you said "...but not accessible". If it's not at all possible to access the funds, they are not taxable income which for an individual is when the interest is paid/made available. If the interest was just notionally deposited into an account controlled by and locked by the bank to which you have no right of access, then you don't need to pay tax. It's income that you would recognise as "accrued" if you were preparing a personal balance sheet, but is not really "paid".

The confusion arises when you have something like a 3 year savings bond from NS&I or a high street bank that credits the income each year but only lets you draw it out penalty free by waiting until the end of the three years. If you can pay them a penalty charge or administrative fee and walk away with your money, then it *has* been made available to you: your money is accessible and you can take it and move on. Which means you need to pay tax because you've earned the income and had it made available to you.


For aroominyork with their one year loan where a borrower is not making monthly interest payments and will only clear the interest with one bullet payment at the end (I'm assuming that's what they're describing; I don't have a ratesetter product myself) then the interest is not going to be taxable until the 18/19 tax year. Unless -as they suggest- the borrower can simply repay early giving them a risk that they get extra taxable current year income and have some undeployed capital.

Fair enough, I thought we'd had instances here of examples where money was locked away, interest credited but the interest was taxable even where it wasn't accessible..

Your description is far more logical but when it comes to tax legislation and interpretation logic doesn't necessarily come into it.