Investor - Frequently Asked Questions
Yes, in most cases. Lending for residential investment is not allowed under HMRC rules although loans for residential development and any commercial property are permitted. Care should be taken to sell your participation in a residential development loan should the borrower decide to roll the loan into an investment in the absence of selling the completed property.
Crowdfunding is classed as a non-standard asset by the FCA for Self Invested Personal Pensions (SIPPs) purposes. You are likely, therefore, to encounter resistance from most SIPP providers. More information on the subject is available from SIPPclub.
If your pension fund is a Small Self Administered Scheme ("SSAS") we have relationships with pension providers who have pre-approved CapitalStackers as a qualifying assets class. See our "Invest Through Your Pension" page.
CapitalStackers will pay interest gross and provide investors with an annual statement of the interest received. Tax payers are obliged to declare this income to HMRC.
If you buy or sell in the secondary market and the transaction includes a premium or discount to the face value of the loan including interest to date, there will be a capital gain or loss which should also be reported to HMRC.
Note: Investment through CapitalStackers is only available to those with UK bank accounts.
In the same way that you would pay a stockbroker for selling your shares, we charge fees for selling loan participations through our secondary market. Details of these transaction charges are published in the membership area.
There are two types of bid in the Primary Market. A Non-Agreed Bid is where investors win by offering the lowest rate and so are subject to being outbid at any time up to the auction close. Alternatively, an Agreed Bid can be made at a discount to the Borrower's target rate or the market rate if lower. The Borrower benefits from a lower than market rate whilst the investor benefits by not being subsequently outbid, even if the market rate drifts lower than this Agreed Bid. Auctions can be wholly competitive with Non-Agreed Bids only; partly competitive where both Agreed and Non-Agreed Bids are enabled; or, non-competitive where the same rate applies to all investors and winning bids are selected on a 'first past the post' basis.
The second type of auction applies to the Secondary Market where an investor chooses to post a participation in an existing deal and other investors compete in terms of how much they are prepared to pay for that investment given it will definitely include rolled up interest in the case of a development and potentially include rolled up interest in the case of an investment loan. We provide calculation toolkits so that the seller and purchaser are able to see their respective returns based on the amount paid. Secondary Market transactions are strictly between investors and do not involve the Borrower.