At Budget the Chancellor announced a radical reform of the ISA system, turning it into a simpler product with an equal subscription limits for cash, and stocks and shares, and increasing the overall limit to £15,000. He also announced that ISA eligibility would be extended to include peer-to-peer loans in order to increase choice for savers about how they invest.
Today the government is publishing a consultation on how best to implement these changes, including whether P2P loans should be included in existing stocks and shares ISAs, or whether they would be best suited to a new, third type of ISA.
Commenting on today’s news, Christine Farnish, Chair of the P2PFA said:
"We are delighted the Government has published its proposals to include peer to peer lending in ISAs. Consumers who lend on P2P platforms will be able to earn tax free returns in future and the increased flow of funds will allow us to offer great value loans to more credit worthy borrowers. This is a vote of confidence from Government in our industry which is bringing much needed competition to the banking sector.”
Financial Secretary to the Treasury David Gauke said:
"We want to support savers at all stages of their life and make sure they have greater flexibility and choice over how they invest and access their savings.
"That’s why as part of our long-term economic plan we announced a radical package of measures at Budget – reducing taxes for the lowest income savers, reforming ISAs and giving people flexibility over their pensions.
"P2P lending is an exciting, innovative new sector and it’s right that investors who want to lend money via P2P platforms should be able to hold these loans in their ISA alongside more traditional investments."
Giles, Zopa’s CEO commented:
"Peer-to-peer ISAs will be a game changer for millions of hard working Brits, and a major shakeup for the UK banking sector. The government consultation is a positive step forward to help define how P2P lending is included and we would welcome a third ISA for P2P. Whatever the outcome, it's certain that UK savers will earn over three times more interest; tax free, than from the disappointing low returns currently available from high street banks."
The consultation will conclude on 12 December.
