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Peer-to-peer lending in an ISA
The P2P money website broke the news yesterday on Twitter that peer-to-peer lending was to be included in an ISA.
This is great news and the result of a campaign from the peer-to-peer industry and publications such as the Telegraph. It is our understanding that after a consultation period, peer-to-peer lending would be included in a new ISA with limits up to £15,000 per annum.
Reactions from the industry
Ian Gurney, founder of the P2P money website:
This is fantastic news for lenders and the peer-to-peer industry as a whole. Peer-to-peer lenders have been disadvantgaged by having to pay tax before bad debts are taken into account and therefore their net returns can be significantly less than expected.
Peer-to-peer lending in the UK has already arranged £1billion in loans, helping UK consumers and businesses, as well as investors looking for a higher return than savings accounts. The inclusion within the new ISA will provide a significant boost to all who benefit from peer-to-peer lending.
Giles Andrews, CEO of Zopa:
Peer-to-peer ISAs are the most exciting thing to happen to the industry since Zopa launched back in 2005. This is a game changing moment for all savers. With ISA inclusion now a reality, we expect to see thousands of people transferring their existing ISAs over to Zopa once we launch them. Peer-to-peer ISAs will help provide a high tax free return and bring consumer savings back to life, even better to know is that all lending is covered by our Safeguard fund, so you can earn high returns and feel safe that your money is protected.
James Meekings, co-founder of Funding Circle:
This news is a huge win for British investors up and down the country, and represents a seminal moment for our industry. The inclusion of peer-to-peer lending in ISAs ensures British people earn inflation-beating, tax-free returns whilst helping support the country's economic recovery.
Today's news will open up peer-to-peer lending to a new audience. Over the last three years more than 30,000 people have lent more than £240M to over 4,000 businesses through Funding Circle - £130M of which was lent in 2013 alone. We're excited that people will be able to use their ISA entitlements to benefit further from our unrivalled track record in the space.
Independent research by government think tank Nesta last year found that businesses that receive a loan through Funding Circle employ on average 11 people, and see an average increase in employment of 27 per cent after receiving finance.
Graham Wellesley, Chairman and Joint-CEO, of Wellesley & Co:
We as an organisation are hugely excited about the inclusion of peer-to-peer lending within the New ISA system for savers and investors. The increase in popularity of peer-to-peer lending has resulted in the introduction of FCA regulation and mainstream government endorsement in the form of the ISA tax wrapper. Wellesley & Co aims to provide an industry leading P2P ISA product and shall develop the internal capabilities to offer this to the mass market whilst retaining the high levels of customer service and satisfaction that we pride ourselves in providing.
Graeme Marshall, Chief Executive of FundingKnight:
Its great to see that todays budget announcement confirms peer to peer loans will now qualify to be included as an investment within ISAs and it is a huge sign of confidence in the peer to peer industry. We hope it will broaden the appeal of peer to peer lending to a wider audience of savers and investors. It will also give our existing FundingKnight investors an alternative way to invest with us.