In the Autumn Statement for 2014 delivered in December 2014 the Chancellor announced a package of measures in support of peer to peer lending and crowdfunding platforms. The reforms are intended to modernize the regulations and tax rules. One of the measures announced was a new bad debt relief for peer to peer lending by individuals.
If a loan made by an individual through a peer to peer lending platform is not repaid the lender will be able to offset the loss made on the loan against income received on other peer to peer loans. The loss relief would be restricted to income from peer to peer loans and could not be offset against other income.
Draft legislation for this loss relief will be published for consultation later in 2015 with a view to including legislation in the Finance Bill 2016. However peer to peer lenders suffering a bad debt on loans made between 6 April 2015 and 5 April 2015 will be permitted to claim loss relief in their tax returns for 2015. In certain cases the loss relief would be available for bad debts on loans to individuals.
The loss relief will be available to individual lenders who are subject to UK tax on their income from peer to peer lending. The relief will also apply to individuals who are in a partnership or part of another type of unincorporated body. The relief will be available when the loan has been determined to be a bad debt and either formal recovery procedures have been taken or the debt has been released by the lender.
