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Govt eyes adding peer-to-peer lending to Isas

Mick McAteer 06

The Government is in talks about allowing investments through peer-to-peer lending to be included in Isas.

The Treasury has confirmed it has started “early stage” talks on how to give tax breaks to investors using peer-to-peer websites such as Zopa, RateSetter and Funding Circle.

Current tax rules mean individuals involved in P2P lending have to pay income tax on profits earned. However, P2P returns can be affected by late or missed payments and defaults, while these losses are not tax-deductible.

Supporters of P2P lending argue that allowing it to be included in Isas will offer significant benefits to those already involved in the practice and support the emerging asset class.

Earlier this year, the Government permitted companies listed on the Alternative Investment Market to be held in Isas, allowing investors to add exposure to some of the UK’s smallest businesses.

A Treasury spokesman says: “The peer-to-peer industry has made representations to the Government in the past with regards to peer-to-peer loans and Isas, alongside other tax issues. The Government keeps all areas of tax policy under review and will continue to engage with the sector on this and other matters.”

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. Stuart Law - CEO Assetz Capital 20th August 2013 at 9:09 am

    This is an excellent move to further diversify the range of investment choices available to ISA holders. Clearly I have a vested interest as Assetz Capital is an established and rapidly growing peer-to-peer lender but nonetheless ISA holders have had to suffer ridiculously low interest rates for such a long time that it is about time they had a choice. I suspect this will only come in when the peer-to-peer lending sector is fully regulated next April but we would certainly welcome discussions with IFA’s at this stage.

  2. Oh great idea. Where will this fall on the risk scale? What will our dear regulator make of it? If structured products are “like spread bets on steroids” (Mr Wheatley quote), then what will these be – money on the 3.15 at Newmarket?

  3. @Harry – I am pretty much with you on that one Harry.
    Counterparty risk anyone? Campari & Ice used to be the basics for lending assement before it became computer say yes or computer say no and experienced branch managers still got it wrong at times. Whose to say Joe Blogs will be better at assessing a good risk when he sees one.
    High risk ideas in the wrong product. Nothing wrong with peer to peer in theory, but it needs to be recognized as such. a better version of peer to peer would be Credit Union accounts being ISArable as they ARE already covered by regulation and FSCS as deposits.

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