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Where Taxpayers and Advisers Meet

Personal loan invested in P2P

petruj87
Posts:1
Joined:Thu Nov 03, 2016 3:50 pm
Personal loan invested in P2P

Postby petruj87 » Thu Nov 03, 2016 3:54 pm

Current economic situation creates quite specific conditions. I can take very large personal loan with only 3.3% interest p.a. and invest it in P2P with return of 4% p.a. effectively gaining 0.7% difference. What are the tax implication. Am I right to report only my gain (0.7%) and tax it as a capital gain? There are advices that HMRC considers P2P as an interest income and whole interest should be taxed, by I won't physically have money to pay tax on full interest, because I never got the money in the first case, they were only borrowed to be invested.

pawncob
Posts:5090
Joined:Wed Aug 06, 2008 4:06 pm
Location:West Sussex

Re: Personal loan invested in P2P

Postby pawncob » Thu Nov 03, 2016 5:35 pm

You'll pay income tax on the whole of the income earned at 4%, with no deduction for the interest paid on the amount borrowed.
With a pinch of salt take what I say, but don't exceed your RDA


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