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Campaign for the fair treatment of peer-to-peer lending losses

Update - the government has now allowed peer-to-peer lending losses on bad debt for individuals to off-set against P2P interest earned from April 2016.

Under current legislation, peer-to-peer lending losses on bad debt for individuals cannot currently be off-set against interest earned for taxation purposes.  The contributors on the Zopa forum proposed to write to their members of parliament, and the following suggested text (detailed below) was developed for inclusion in letters.


Dear Members of Parliament,

Peer-to-peer (P2P) lending has become an established online medium allowing users to participate in the spirit of the government's “Big Society” initiative.
In spite of recent economic turmoil this people-oriented resource continues its growth.
For lenders, P2P complements more traditional investment opportunities whilst borrowers are afforded alternative and competitive means of obtaining finance.
However, current taxation rules penalise individual P2P lenders.

• Banks and other financial institutions are able to off-set bad debt against interest earned.
• Peer-to-peer Lenders are not able to off-set bad debt against interest under current HMRC rules.

This disparity effectively means peer-to-peer losses are compounded.
I would ask you to request a review of the taxation of peer-to-peer lending with the aim of allowing the off-setting of losses through bad debt against interest earned.
Please would you assist in bringing this information to the attention of the Treasury Ministers, and support the instigation of appropriate change(s) in legislation?

Yours faithfully,

p2pmoney.co.uk