Has the Treasury’s announcement fuelled P2P growth?

Has the Treasury's announcement fuelled P2P growth?




P2P lenders have responded to the Treasury's announcement which stated that the first £1,000 of interest earned through P2P lending will now be tax free.

P2P lenders have responded to the Treasury’s announcement which stated that the first £1,000 of interest earned through P2P lending will now be tax free…

In his speech on the 18th March, George Osborne introduced a new Personal Savings Allowance which would take 95 per cent of taxpayers out of savings tax altogether.

“From April next year the first £1,000 of the interest you earn on all of your savings will be completely tax-free,” he announced.

“People have already paid tax once on their money when they earn it. They shouldn’t have to pay tax a second time when they save it.

“With our new Personal Savings Allowance, 17 million people will see the tax on their savings not just cut, but abolished.”

Since then, Giles Andrews, CEO and co-founder of P2P heavyweight, Zopa, has responded that the news will mean there could be a rise in P2P investors, due to being able to lend tax free come April.

“It's fantastic news that The Treasury has confirmed the new savings tax break will also apply to interest earned from P2P lending,” Giles said.

“The news is very exciting as the vast majority of Zopa's 58,000 lenders can now lend tax free from April.

"I expect this will be a huge boost to the industry and will attract a large number of new consumers to start lending and earn returns of five+ per cent tax free."

Rhydian Lewis, CEO of P2P platform, RateSetter, discussed that although there is a wait to outline what will be happening in regards to P2P ISAS, the £1,000 tax free interest advantage will be lapped up by investors.

“Peer-to-peer investors will have to wait until the summer for confirmation of the exact details of how P2P lending will work within ISAs.

"Maybe the Chancellor is buying some time to properly consider the Lending ISA, which after all, would be a game changer for the industry,” Rhydian said.

“Nevertheless, we expect our lenders to take full advantage of the rabbit that Osborne has pulled out of the Chancellor’s hat – the £1,000 tax free interest that lenders can earn.”
 
Proplend, the online marketplace for secured commercial mortgages, also recently discussed how to earn £1,000 tax free interest by lending with them on their site.

On its website it stated: “Depending on the level of risk you were willing to accept and the interest rate it returned, you would need to make P2P loans of between £10,000 to £18,000.”

“We may be getting closer to tax free P2P income than we think,” it was concluded.

 

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