P2P lending interest to be included in £1000 tax free

masonic

What would be quite interesting, assuming of course these plans actually happen and that P2P is included, is a P2P product that could be opened after 5th April 2015 and that pays interest annually so that the first interest payment is made after these new rules have come into effect.

badger09

bowlhead99 wrote: »

But given nobody is talking about bond funds getting a tax break and all the government-to-consumer advice is talking about 'savings interest', and they have not published any government-to-consumer statement that mentions 'investment interest' or 'investment income', I can't help wondering if the p2p lenders got a soundbite from a mistaken Treasury official which will lead to an embarrassing backpedal later? If not, it might mean that this deal has been deliberately pre-agreed to be given to p2p lenders to avoid the government having to give a concession on putting p2p loans into a S&S ISA on the same sort of timescale.

Me too.

I well remember having quite heated discussions many years ago with Zopa's CEO when Zopa were erroneously advising lenders that bad debts were tax deductible

kidmugsy

bowlhead99 wrote: »

they would be making it obvious that 'fat cats' would be benefitting too (albeit only on the first £1k)

Nah; cattus fatus gets only £500 p.a. advantage.

colsten

kidmugsy wrote: »

Nah; cattus fatus gets only £500 p.a. advantage.

And cattus fattus advantus gets zero p.a. advantage.

colsten

badger09 wrote: »

Me too.

I well remember having quite heated discussions many years ago with Zopa's CEO when Zopa were erroneously advising lenders that bad debts were tax deductible

They even made a cartoon about that heated discussion

badger09

:rotfl::rotfl::rotfl::rotfl::rotfl::rotfl:

Sadly, I don't have long dark hair I'll leave the rest to the imagination

Broken_Biscuits

on the ratesetter section of p2pindepentforum.co.uk their rep has said unofficially that the £1000 new rules will apply to p2p, however, then finishes the post by saying discussions are ongoing and he will keep us posted.

so nothing agreed yet but intentions are that p2p will be included.

jamesd

masonic wrote: »

In that case I guess interest from bond fund distributions would go in this section also?

For the tax return, of course. And the reduced tax rate introduced in Budget 2014 is explicit that interest distributions from funds are included. Presumably they won't choose to use a definition that excludes some types of interest and not others.

For the Budget 2014 changes dividends were not included but these were:

"What counts as savings income?
This includes interest from savings accounts you hold with banks, building societies and other account providers, such as credit unions. It also includes interest distributions from authorised unit trusts and open-ended investment companies and income which is not interest, such as the profit on government or company bonds which are issued at a discount or repayable at a premium. Other types of savings income include purchased life annuity payments and gains from certain contracts for life insurance."

No guarantee that the same will be done this time but two rules would not be very clever of them.

masonic wrote: »

The thought has crossed my mind that the tax free interest allowance might be the first in a series of steps that ultimately leads to the demise of the cash ISA.

The cash ISA would still have a role as a place to move S&S ISA money to at times when it is desired to be uninvested.

masonic

jamesd wrote: »

The cash ISA would still have a role as a place to move S&S ISA money to at times when it is desired to be uninvested.

The point that I was making was not that ISAs would be rendered useless (which they won't, in particular not for the wealthiest), rather I could see cash ISAs ultimately being scrapped - if the Government are introducing an essentially means tested allowance, should they continue offering the universal equivalent, or instead replace that with a more generous version of what they have just proposed?