Chancellor introduces new bad debt relief for lending through Funding Circle
One of the main questions investors have asked us over the last four years is what more can be done to encourage the Government to introduce tax incentives for investors, specifically the introduction of peer-to-peer lending into ISAs and income tax relief on loans
As many of you will know, following our campaign the Government announced in March plans for marketplace lending to be included within an ISA wrapper; and this week’s Autumn Statement delivered another significant announcement for all individual investors.
The Chancellor confirmed plans for the introduction of a new bad debt relief for individuals lending through marketplaces like Funding Circle. This means that losses incurred by lending through Funding Circle will be offset against income tax rather than capital gains tax. This relief is expected to be effective from April 2015.
This is one of the most significant changes introduced by the Government for the industry and something we have been campaigning on for four years. It is supported by both Labour and the coalition Government and, alongside the ISA introduction, will help create a much fairer tax system for individuals engaged in marketplace lending.
Depending on your individual tax situation, by April next year we estimate individuals will be able to to earn up to 25% more as a result of these changes – and potentially significantly higher depending on your personal investment strategy. Overall this is a win-win for Funding Circle investors and businesses and we expect it will have a hugely positive impact on the wider industry.
The Funding Circle team