Chancellor George Osborne announced in this year’s Budget that in addition to the new ISA he would like to include Peer to Peer Lending with the ISA wrapper, making the interest received tax free.
It’s a great idea but the issue is how could this be achieved, unlike the bank deposits in Cash ISAs Peer to Peer Lending is not protected by the Financial Services Compensation Scheme. In order to mitigate risk, Proplend supports each loan with a 1st charge over an income producing commercial property, so there is a documented income stream coming from a tenants lease and there is capital protection from the physical asset.
The government has announced this morning that it is considering a new tax free individual savings account (ISA) specifically for people who wish to lend money directly to borrowers using peer to peer lending platforms, this will be in addition to the two existing ISAs for cash and shares.
In 2012 – 2013 approximately £40 billion was put into cash ISA’s, in a recent survey conducted by Proplend, 85% of those asked said they would use their ISA when available to make Peer to Peer Loans. Let’s hope that the treasury consultation announced today is able to have the new P2P ISA ready for next April.