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.”