Tax rebates and performance

Hi All

I discovered this marvellous piece of software by accident a few days ago. I have been looking for a decent tracking solution for ages. Mostly things are pretty intuitive but I am stuck on something:

  • In the UK, we get a 1/3 tax rebate for investing in start-ups. I can’t work out how to record this. Looking at the forum, there was a suggestion about two entries.

I can assume one entry is against the security / cash combo which recognises the 1/3 as a cash entry but this is not reflected in performance.

In my particular example, I invested 1000 into something that I think is now worth zero (as start-ups somethings go). My performance currently has a loss of a 1000 but in reality, the loss is 666. How do I calculate this correctly without adjusting the purchase price?

Thanks!

Welcome DarkDogZA,

we are happy that you like the software. Unfortunately you touched an area PP is not prepared for … national specialities (also German specialities are not covered in order to make PP as internationally usable as possible).

I most probably did not yet fully understand the tax rebate system on startup investments. Do you get a discount on the stocks? Do you get a third discount on the taxes? Or do you get tax back equal to the amount of a third of the stock?

Hi Harry

Thank you. I really should learn more than very basic German given that my employer is a certain German fund house!

In terms of the tax rebate system, it works something like this

01/01/2020 - Invest EUR1000 into an unlisted startup that meets certain tax rules
31/01/2021 - Complete personal tax return and disclose the investment above
28/02/2021 - Receive EUR300 back as a cash transfer from the UK tax authority into my personal bank account

If the Investment needs to be written off, I have lost EUR600 and not EUR1000 which is what I was trying to reflect in the performance stats.

Thank you.

Hello, in this case you should be able to use the ‘tax refund’. It is in the context menu of the respective stock and you could create a booking of 300 EUR at the 28/02/2021.

I hope this helps

Hi,

I have done that already but it does not change the performance calculation i.e. I still show a full loss of 1000 in my example?

It is important to distinguish between how the history of a security is booked correctly and how one sees performances personally.

In your case you get a proper tax refund. In order to get to a visualization or a “performance” you are happy with you should look into the topic categories in PP or play around with filters (without me knowing a solution). The topics categories or filters in PP is powerful, however, it needs some time to get used to it and to get comfortable with it.

But, whatever you tweak you should have a clean base with proper bookings. Otherwise you will mess up things later even though it may work in the short run. You bought a number of stocks for a certain price, paid taxes and were refunded some taxes. That you need to book in PP. From there you may orn may not achieve the value you want to see.

I hope this makes sense

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