The 2014 Autumn Statement was very encouraging for the Peer to Peer Lending Industry – thank you Mr Osborne!
George Osborne in his Autumn Statement stated that the Government is determined to support a more competitive banking sector where new banks, alternative providers and financial technology (fintech) firms can thrive alongside the
established players, competing to offer new and improved services to customers. This will be achieved through a package of measures to remove barriers to their growth from regulation and tax rules.
The Competition and Markets Authority’s (CMA) announcement of a market investigation into banking builds on a wide-reaching programme of government reforms to address competition issues and make the UK the leading global hub for fintech companies. These include a new bad debt relief for lending through P2P platforms; a consultation on whether to extend ISA eligibility to lenders using crowdfunded, debt-based securities and an intention to review financial regulation which currently stands in the way of institutional lending through P2P platforms.
Key points:
Removing regulatory barriers for peer-to-peer (P2P) lending – The government announces its intention to review financial regulation which currently stands in the way of institutional lending through P2P platforms.
Bad debt relief on investments made through the peer-to-peer lending industry – 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. 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.
Withholding regime applied across peer-to-peer lending platforms – The government will consult on the introduction of a withholding regime for Income Tax to apply across all P2P lending platforms from April 2017. This will help many individuals to resolve their tax liability without them having to file for Self Assessment.
We are still waiting to see the outcome of the consultation on whether to extend ISA eligibility to P2P lending which is expected early 2015. Fingers crossed.
