Kufflink P2P lending chat thread

bxboards

bluenun wrote: »

I invested with Kuflink last May and have a question regarding tax.
I understand I get £1000 of banking interest tax free per year.

Does the £100 cashback from Kuflink need to be included as interest and also the £75 I received for following a referral link?

Any referral payments (commission) are taxable. You cannot include them in your Personal tax free interest allowance as its not interest.

Cashback for signing up is treated as a discount and is not taxable.

A few people have claimed commission payments are not taxable - this is wrong and wishful thinking (or just blatant tax dodging if I was being less charitable!) - HRMC or your local tax office, will confirm. Some people have had wrong advice by calling the referral commission 'cashback' previously when asking HRMC about this.

Kufllink will also have declare any commission payments + interest to HRMC on the next tax statement which you'll get around May 2019.

Nardge

Cashback (a discount or partial refund applied to a purchase) is not taxable, and not included in the PSA

Referee referral bonuses are not taxable (are viewed as cashback), and also not included in the PSA.

Referrer referral bonuses (treated as an 'annual payment' or 'other income' in most cases), are taxable,
though again are not included in the PSA

In your case therefore, neither appear taxable (you were the referee), and neither are part of your £1000 PSA.

With Kind Regards

bxboards

Nardge wrote: »

Referee referral bonuses are not taxable (are viewed as cashback), and also not included in the PSA.


With Kind Regards[/FONT]

That is incorrect - sites such as MoneySavingExpert, Quidco, Topcashback or even a door to door seller who tried to get you to sign up for a charity (a 'chugger') or someone selling Tupperware all pay tax on commission from a referral.

It's income, not cashback.

I was doing Kuflink referrals when they started the scheme back in early 2018 and have a tax statement for 2017-2018 which shows this is reported to HRMC (correctly) as taxable income.

I would advise anyone to get your own tax advice not rely on forum posts (from anyone) if in doubt.

I'd love my referrals to be tax free as I started the referral thread but I confirmed (several times!) they are taxable.

Nardge

bxboards wrote: »

That is incorrect - sites such as MoneySavingExpert, Quidco, Topcashback or even a door to door seller who tried to get you to sign up for a charity (a 'chugger') or someone selling Tupperware all pay tax on commission from a referral.

It's income, not cashback.

I was doing Kuflink referrals when they started the scheme back in early 2018 and have a tax statement for 2017-2018 which shows this is reported to HRMC (correctly) as taxable income.

I would advise anyone to get your own tax advice not rely on forum posts (from anyone) if in doubt.

I'd love my referrals to be tax free as I started the referral thread but I confirmed (several times!) they are taxable.

Perhaps 'viewed' wasn't the right word, 'perceived as' may have been better... Ultimately I was going off my interpretation of what an equally authoritative person had relayed to me in answer to essentially the very same question. It is my understanding that an individual does not pay tax on the Referee Referral, and it is essentially Cashback. As described previously too, the Referrer Referral (which is what you appear to discuss and to actively harvest), is something else.

Certainly tax advice from HMRC or a Financial Adviser might be ideal, though receiving the correct answer (especially with the former) will assume knowing what to ask and how to ask it, as you have correctly stated.

I think many people would appreciate a clear-cut flow diagram or similar for the above.
Perhaps (if as you imply, my interpretation is mistaken) you could supply us with the same?

With Kind regards

masonic

bxboards wrote: »

That is incorrect - sites such as MoneySavingExpert, Quidco, Topcashback or even a door to door seller who tried to get you to sign up for a charity (a 'chugger') or someone selling Tupperware all pay tax on commission from a referral.

It's income, not cashback.

I was doing Kuflink referrals when they started the scheme back in early 2018 and have a tax statement for 2017-2018 which shows this is reported to HRMC (correctly) as taxable income.

I would advise anyone to get your own tax advice not rely on forum posts (from anyone) if in doubt.

I'd love my referrals to be tax free as I started the referral thread but I confirmed (several times!) they are taxable.

This is of course correct for someone who refers someone else to a site. They are performing a service for the company and being paid for it - that's taxable income.

When someone joins a site and obtains, say, £50 for making a £1,000 investment for 1 year (whether they are referred by someone else or not), then that would normally not be taxable - subject to how this is reported by the company making the payment of course. They are receiving a promotion deal on a purchase. This is often called cashback and that makes the position clear.

bluenun

I became self employed last year so just trying to be clear what needs to be declared and what does not.

So on my 2019/2020 tax return form I will declare the interest on the £500 I receive from Kuflink, not declare the £100 cashback and from the differing answers not sure about the £75 I received as a referee.

If I do need to declare it then it will go down in the "Other Income" section and not as interest.

Nardge

bluenun wrote: »

I became self employed last year so just trying to be clear what needs to be declared and what does not.

So on my 2019/2020 tax return form I will declare the interest on the £500 I receive from Kuflink, not declare the £100 cashback and from the differing answers not sure about the £75 I received as a referee.

If I do need to declare it then it will go down in the "Other Income" section and not as interest.

This is my understanding:

If you received the £75 because you referred ("referrer referral") someone else, and they invested using your link, it is declared as 'Other Income', it is taxed (according to your tax band), but does not constitute part of your £1000 PSA allowance.

If you received the £75 because you invested having used someone else's link for that purpose ("referee referral"), it is 'Cashback' of sorts (or at least that's how you can perceive it), and it is not taxed... My caveat would be to note Masonic's words however: "normally not be taxable - subject to how this is reported by the company making the payment of course. They are receiving a promotion deal on a purchase. This is often called cashback and that makes the position clear." Having had this specific conversation myself before regarding Kuflink, I believe Kuflink do not report the latter sum in a manner that would make it taxable...

With Kind regards

masonic

Nardge wrote: »

This is my understanding:

If you received the £75 because you referred ("referrer referral") someone else, and they invested using your link, it is declared as 'Other Income', it is taxed (according to your tax band), but does not constitute part of your £1000 PSA allowance.

If you received the £75 because you invested having used someone else's link for that purpose ("referee referral"), it is 'Cashback' of sorts (or at least that's how you can perceive it), and it is not taxed... My caveat would be to note Masonic's words however: "normally not be taxable - subject to how this is reported by the company making the payment of course. They are receiving a promotion deal on a purchase. This is often called cashback and that makes the position clear." Having had this specific conversation myself before regarding Kuflink, I believe Kuflink do not report the latter sum in a manner that would make it taxable...

That's exactly as I understand it. When you are referred by someone else and get paid as a condition of investing, then if it is taxable (for example it is treated as bonus interest rather than cashback) then it will appear on your tax statement, so providing you use those figures given to you by the platform there is no risk of under-declaring.

bluenun

masonic wrote: »

That's exactly as I understand it. When you are referred by someone else and get paid as a condition of investing, then if it is taxable (for example it is treated as bonus interest rather than cashback) then it will appear on your tax statement, so providing you use those figures given to you by the platform there is no risk of under-declaring.

I see what you are saying Masonic but as the referee I would assume the tax statement that Kuflink will send me after 12 months will only make note of my £500 deposit, £100 cashback and the interest I receive.
They will not be aware of the £75 I received from the Referrer.

Nardge

bluenun wrote: »

I see what you are saying Masonic but as the referee I would assume the tax statement that Kuflink will send me after 12 months will only make note of my £500 deposit, £100 cashback and the interest I receive.
They will not be aware of the £75 I received from the Referrer.

If you received the £75 from the Referrer as a result of using their link to join up, they themselves will incur the "Referrer Referral" tax on their tax certificate. A diligent Referrer should thus always take into account their own prospective taxation prior to deciding by how much they can afford to split their "Referrer Referral" with another (their Referee).

In your case, your Referrer will have received £100, and forwarded £75 to you. As a result, if he is in the 20% tax band, he will have made £5 for himself, if in the 40% tax band, then he will actually incur a £15 loss... Ultimately this is their consideration to make however. It would become yours if you became the referrer for a future referee...

The take-home message for Referrers is to factor their taxation prior to choosing how much to forward to Referees.

With Kind Regards