Out-Law News | 05 Dec 2014 | 2:36 pm | 1 min. read
Funding Circle and Zopa both told Out-Law.com that they welcomed the proposals unveiled in the chancellor's Autumn Statement (108-page / 1.93MB PDF). On Wednesday, Osborne outlined plans to provide new "bad debt relief" to lenders that lend via P2P platforms.
"The government will introduce a new relief to allow individuals lending through P2P platforms to offset any losses from loans which go bad against other P2P income," the Autumn Statement said. "It will be effective from April 2016 and, through Self Assessment, will allow individuals to make a claim for relief on losses incurred from April 2015."
James Meekings, co-founder of Funding Circle said that the change was something his company had campaigned for.]
“This change in the tax system will make lending to small businesses via our marketplace much fairer for individual investors, putting them in an equal position to larger lenders such as banks," Meekings said. "It will have a hugely positive impact on the peer-to-peer lending industry and is a win-win-win for investors, borrowers and the economy at large."
Giles Andrews, chief executive and co-founder of Zopa, welcomed Osborne's plans to tackle what he said is "an out-dated tax law that disadvantages alternative financial models like peer-to-peer lending (P2P)".
"Overturning this tax law means thousands of consumers will keep more of their returns from lending as they will now be able to offset any losses against their P2P interest when calculating tax due on that interest," Andrews said. "Zopa and the P2PFA have campaigned hard on this issue and we very much welcome the change. This is a progressive reform from the Treasury that reflects the growing importance of the UK’s alternative financial services sector.”
According to the Autumn Statement, the UK government will also hold a consultation on whether to "extend ISA eligibility to lenders using crowdfunded, debt-based securities". The UK government also intends to "review financial regulation which currently stands in the way of institutional lending through P2P platforms".
The government said it would also consult on "the introduction of a withholding regime for income tax to apply across all P2P lending platforms from April 2017".