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Autumn statement: peer-to-peer lending

The government is looking at ways to make peer-to-peer lending more tax efficient.
December 4, 2014

The government has announced measures to support peer-to-peer lending and is planning a consultation on whether crowd funded debt based securities could be included in individual savings accounts (Isas), in addition to its current plans to allow peer-to-peer loans in Isas.

The government is to review financial regulation which currently prevents institutional lending through peer-to-peer platforms. It it will also introduce a new relief to allow individuals lending through peer-to-peer platforms to offset any losses from loans which go bad against other peer-to-peer income. This will be effective from April 2016 and, through self-assessment, allow individuals to make a claim for relief on losses incurred from April 2015.

The government will consult on the introduction of a withholding regime for income tax to apply across all peer-to-peer lending platforms from April 2017. This will help many individuals to resolve their tax liability without having to file for self-assessment.

HMRC said a consultation on whether to allow crowd funded debt based securities in Isas will take place following the response to the current consultation on including peer-to-peer loans in Isas, which closes on 12 December. It is expected the response to the consultation on including peer-to-peer loans in Isas will be published at some point next year.

"This measure refers to crowd funded debt securities which are an alternative method for firms to gain finance, and operate in a similar manner to the peer-to peer business model," said a spokesperson at HM Revenue & Customs. "Crowd funding platforms link investors with firms issuing securities, and handle the payments."

"Whether a UK company chooses to offer a loan or a bond makes little difference to everyday investors, but including both in Isas makes a real difference, increasing net returns for lenders and lower cost of finance for UK businesses," said Julia Groves, chair of the UK Crowdfund Association.