| Announced in the first newly elected Conservative Government’s Summer Budget 2015, the Government have decided that Peer-to-Peer investments will be ISA eligible from the 6th April 2016.
Peer-to-Peer investments will be eligible through the creation of a third ISA type; the ‘Innovative Finance ISA’. The Government have published its response to the ISA qualifying investments consultation on including Peer-to-Peer investments which can be viewed in full here. The Government have decided to create the new ISA type, to distinguish it from other ISA qualifying investments currently available. The new Innovative Finance ISA will be subject to different rules in relation to withdrawal, transfer and ownership, therefore a separate identity is required. The creation of the Innovative Finance ISA is consistent with the Government’s objectives to encourage Peer-to-Peer growth and ensure maximum consumer choice as investors will not need to choose between only Stocks and Shares but also Peer-to-Peer investments. What are the next steps for the Innovative Finance ISA? The Government believes that the approach to the new Innovative Finance ISA is the most appropriate method of including Peer-to-Peer investments within an ISA type wrapper. To ensure that the new ISA’s modifications are clear the Government intends to publish draft legislation for technical consultation later this year, with a view to legislating to allow Peer-to-Peer investments to be held in an ISA from 6th April 2016. Alternative Finance Sector Updates: Bad debt relief for the Peer-to-Peer (P2P) Industry – As announced in the Autumn Statement of 2014, the Government will allow tax relief on bad debts incurred on P2P loans against other P2P income from April 2015. Draft legislation will be published later this year. (Finance Bill 2016) Peer-to-Peer withholding tax – In the Autumn Statement of 2014 the Government announced that new rules on how withholding tax applied on P2P loans would take effect from April 2017. The Government will consult on the proposals over summer 2015. (Finance Bill 2016) Competition in SME lending – The Government will introduce final legislation implementing two major reforms to the SME lending market. The first will require the UK’s major banks to share credit information on their SME customers with other finance providers through designated Credit Reference Agencies (CRAs). The second will require those same banks to offer SMEs they reject for finance the opportunity to be referred to a finance platform that can help match them with alternative lenders. Pensions Updates: Following the successful launch of Pension Wise in April 2015, the Government is extending access to this free and impartial guidance service to those aged 50 and above. From April 2016 the Government will deliver a major reduction in the level of tax on savings with the introduction of the Personal Savings Allowance, which will exempt the first £1,000 of savings income from tax for basic rate taxpayers and the first £500 for higher rate taxpayers, this Budget announces the creation of a new £5,000 dividend allowance. For the Summer Budget 2015 in full, please see here. |