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    • Nardge
    • By Nardge 18th Mar 19, 6:05 PM
    • 123 Posts
    • 20 Thanks
    Nardge
    Yes, but isn't the way to repair an ISA breaching the invalid combination of ISAs rule to remove the subscriptions from the 2nd (or later) ISA of the same type? In this case the invalid subscriptions are the only subscriptions made to the ISA. That is what the worked examples in the old ISA Guidance Notes document showed. Whether it is repaired or voided only makes a practical difference if the ISA also contains valid subscriptions from an earlier tax year.


    Yes, this is a very good (further) reason not to oversubscribe to the Ratesetter ISA.
    Originally posted by masonic
    For Clarity, my Kuflink account already had ISA money from previous 'old' tax years. The error was to invest the cashback and subsequent referral fee allied with the above into this 'New' tax year, rather than extracting it and diverting it elsewhere, for instance Ratesetter...

    Does that change anything?

    With Kind Regards
    Last edited by Nardge; Yesterday at 6:08 PM.
    • masonic
    • By masonic 18th Mar 19, 6:34 PM
    • 11,352 Posts
    • 8,976 Thanks
    masonic
    For Clarity, my Kuflink account already had ISA money from previous 'old' tax years. The error was to invest the cashback and subsequent referral fee allied with the above into this 'New' tax year, rather than extracting it and diverting it elsewhere, for instance Ratesetter...

    Does that change anything?
    Originally posted by Nardge
    Potentially it means income on the whole contents of the ISA may be taxable from the date the invalid payment was made until the date it is repaired by HMRC. It doesn't really make any difference to your options or suggested course of action.
  • jamesd
    Yes, but isn't the way to repair an ISA breaching the invalid combination of ISAs rule to remove the subscriptions from the 2nd (or later) ISA of the same type? That is what the worked examples in the old ISA Guidance Notes document showed.
    Originally posted by masonic
    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.

    Does that change anything?
    Originally posted by Nardge
    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.
    Last edited by jamesd; Today at 6:31 AM.
    • Zero Sum
    • By Zero Sum 19th Mar 19, 7:44 AM
    • 756 Posts
    • 608 Thanks
    Zero Sum
    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.
    Originally posted by masonic
    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
    • By Empor 19th Mar 19, 10:18 AM
    • 67 Posts
    • 7 Thanks
    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
    • By fun4everyone 19th Mar 19, 12:14 PM
    • 1,311 Posts
    • 2,035 Thanks
    fun4everyone
    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?
    Originally posted by Empor
    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
    • By Nardge 19th Mar 19, 3:04 PM
    • 123 Posts
    • 20 Thanks
    Nardge
    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.
    Originally posted by jamesd
    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
    Last edited by Nardge; Today at 3:06 PM.
    • masonic
    • By masonic 19th Mar 19, 5:50 PM
    • 11,352 Posts
    • 8,976 Thanks
    masonic
    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.
    Originally posted by Zero Sum
    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.
    Last edited by masonic; Today at 5:53 PM.
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