Campaign for the fair treatment of peer-to-peer
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.
P2P complements more traditional investment
opportunities whilst borrowers are afforded
alternative and competitive means of obtaining
However, current taxation rules
penalise individual P2P lenders.
• Banks and other financial institutions
are able to off-set bad debt against interest
• 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
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?