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Autumn Statement 2014: New protection for peer-to-peer retail investors

2 min read

03 December 2014

Former editor

Investors will now no longer be required to pay income tax on any bad debt generated through activity with peer-to-peer funding platforms, the Autumn Statement has revealed.

The rise of peer-to-peer finance (P2P), dominated by companies such as Funding Circle, Zopa and MarketInvoice, has led the government to introduce new measures aimed at making accessibility easier and less risky.

Now, through details included in the Autumn Statement document, retail investors will be able to offset losses much like banks are able to.

The wording of the change reads: “This Autumn Statement announces support for peer-to-peer (P2P) and crowdfunding platforms though a package of measures to remove barriers to their growth from regulation and tax rules.

“These include a new bad debt relief for lending through P2P platforms; a consultation on whether to extend ISA eligibility to lenders using crowdfunding, debt-base securities and an intention to review financial regulation which currently stands in the way of institutional lending through P2P platforms.”

The last year has seen a number of new initiations aimed at increasing the flow of finance to small and medium-sized businesses through promotion of alternative funding options. Largely driven by the community itself, banks will soon be required to refer failed loan applications to an alternative platform that may be a better fit.

Read more on alternative finance:

Commenting on the Autumn Statement announcement, Funding Circle co-founder James Meekings said: “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.

“More than 35,000 people currently lend through Funding Circle and the average investor could earn up to 25 per cent more overnight per year as a result of this change. 

“This could potentially be significantly higher depending on an individual’s investment strategy. It will have a hugely positive impact on the P2P lending industry and is a win-win-win for investors, borrowers and economy at large.”

Read more on the Autumn Statement 2014: