p2p investment

[Pegasus]

I don't think it would affect entrepreneurs' relief since it will be classed as a loan between 2 companies. I can't see that being classed as an investment. In any case I will check this with my accountant.

Yes, thats exactly what my thought also was. From the viewpoint of the contracting limited company OurCo, it is just a "loan" given to the SPV, on which it will get some interest (similar to what would happen in P2P, savings account etc), so it should not be an issue.

But my accountant said that because the "intent" of that loan is to "invest" the money in BTL through the SPV, there may still be an issue with entrepreneurs' relief.
(I even clarified that if I ever want to close OurCo, I will ensure that the loan has been returned before that etc)

Please have a discussion with your accountant and let us know what he says.

Any views / comments on this, from other experienced members here, are also most welcome.

Thanks.

[ChimpMaster]

I don't think it would affect entrepreneurs' relief since it will be classed as a loan between 2 companies. I can't see that being classed as an investment. In any case I will check this with my accountant.

correct as per my discussion with the accountant

[dingdong]

I’m not sure spreading your P2P investments between platforms will offer much protection as nobody quite knows what will happen to P2P when the next recession hits. A rapid increase in bad debts / crash in property prices could drive a number of platforms out of business. Even lower risk platforms like Ratesetter have already experienced issues with bad debts being higher than expected, and Wollesley recently announced they’d need additional investment this year to survive.

You might be better putting less in P2P but with higher risk platforms and then putting the rest in FSCS protected accounts – that way your overall return might be the same but you wouldn’t be risking all your capital if the whole of the P2P market goes into meltdown at some point in the next few years.

[jmann]

I’m not sure spreading your P2P investments between platforms will offer much protection as nobody quite knows what will happen to P2P when the next recession hits. A rapid increase in bad debts / crash in property prices could drive a number of platforms out of business. Even lower risk platforms like Ratesetter have already experienced issues with bad debts being higher than expected, and Wollesley recently announced they’d need additional investment this year to survive.

You might be better putting less in P2P but with higher risk platforms and then putting the rest in FSCS protected accounts – that way your overall return might be the same but you wouldn’t be risking all your capital if the whole of the P2P market goes into meltdown at some point in the next few years.

Yes, that was my main concern regarding p2p. I guess we have to simply put up with lousy interest rate from banks.

[Pegasus]

correct as per my discussion with the accountant

Hi ChimpMaster - have you taken that route? That is, giving a loan to SPV, and buying a BTL through SPV?

JMann - Please let us know what your accountant says.

Please let me know if others have any opinion on this.

[ChimpMaster]

Hi ChimpMaster - have you taken that route? That is, giving a loan to SPV, and buying a BTL through SPV?

JMann - Please let us know what your accountant says.

Please let me know if others have any opinion on this.

No my plans are different. I will be retiring from contracting in a year or so and so will go the MVL route.

I had looked into SPVs and loaning the funds. I would do that if a good property development opportunity came up but it hasn't yet, so I'm more likely to retire from contracting and then invest the funds after taking ER.

All my BTLs are held personally at this time. I may look to incorporate in the future and claim relief to work around CGT and SDLT double-taxation.

[Pegasus]

No my plans are different. I will be retiring from contracting in a year or so and so will go the MVL route.

I had looked into SPVs and loaning the funds. I would do that if a good property development opportunity came up but it hasn't yet, so I'm more likely to retire from contracting and then invest the funds after taking ER.

All my BTLs are held personally at this time. I may look to incorporate in the future and claim relief to work around CGT and SDLT double-taxation.

Thanks ChimpMaster.

To clarify what do you mean by "..claim relief to work around CGT and SDLT double-taxation". What's that about and how does that work?
(Interested as I have few personal BTLs as well)

Thanks.

[ChimpMaster]

Thanks ChimpMaster.

To clarify what do you mean by "..claim relief to work around CGT and SDLT double-taxation". What's that about and how does that work?
(Interested as I have few personal BTLs as well)

Thanks.

Read up on section 162 "incorporation relief" to void having to pay CGT when moving properties in a Ltd Co. It depends a lot on property business being your main occupation.

SDLT is more difficult to mitigate but can be achieved over a period of time with a move to LLP and then Ltd.

None of this is easy and there are many things you will need to consider, so seek out an accountant who is familiar with property and familiar with the process.

It is very likely that your lenders will need to be consulted and they could ask you to refinance on to business loans.