Peer to peer lending may be soon included in ISAs
According to the Telegraph, industry sources say that a consultation on opening up ISAs to peer-to-peer lending – sometimes referred to as crowd funding – is expected to be unveiled by George Osborne in the Autumn Statement on Thursday. It is believed that a consultation lasting three to four months will launch on Thursday, with any changes likely to take effect in April 2015.
Benefits for investors and savers
Peer-to-peer websites operate by linking savers to borrowers directly – often leading to better rates for both. Current tax rules mean individuals involved in peer to peer lending have to pay income tax on profits earned, with customers asked to include any interest on self-assessment tax returns. Supporters of the move to include peer to peer lending in ISAs argue that such a move will offer significant benefits to those already involved, as well as encouraging new investment.
Developments since August
HM Revenue & Customs revealed in August 2013 that it was considering allowing savers to earn returns tax-free by allowing peer to peer lending schemes to be included with ISAs. ISAs have already been opened up to some extent during 2013, with the Government announcing earlier this year that shares from companies listed on the Alternative Investment Market could be held in ISA. This move aimed to allow investors to gain exposure to some of the UK’s newer, smaller businesses, while boosting the funding of these smaller companies at the same time.
Peer to Peer Lenders respond
Rhydian Lewis, chief executive of RateSetter, commented: “If, as the Telegraph suggests, peer to peer ISAs are in the statement, then it will be a game-changer for our industry. Over the last few years RateSetter and others in the space have proved themselves to be safe, transparent, and highly competitive vehicles for savers. It would absolutely right to get recognition of this from Government.”*
The tax efficiency of ISAs is based on current tax law and there is no guarantee that tax rules will stay the same in the future.
No news, feature or comment should be seen as a personal recommendation to invest. If you are in any doubt as to the suitability of a particular investment you should seek independent financial advice.* Source: http://www.telegraph.co.uk/finance/budget/10489168/Autumn-Statement-2013-Peer-to-peer-to-be-included-in-Isas.html