Yesterday afternoon the Chancellor, George Osborne, presented his eighth Budget to Parliament. In the past few years we have become accustomed to big announcements affecting marketplace lending as well as the wider fintech sector. From the creation of the new Innovative Finance ISA to introducing bad debt relief on marketplace loans, Osborne has been a consistent supporter of the sector.
This year, while there was less fanfare, there were still several welcome outcomes for investors. The main announcement was a large increase in the annual tax-free ISA limit from £15,240 currently to £20,000 in April 2017. This will apply to all types of ISA, and means that investors can look forward to enjoying even greater tax-free returns from peer to peer investments in the new Innovative Finance ISA you can read more about the forthcoming RateSetter ISA here.
Also in 2017, a new addition to the suite of ISAs will be the “Lifetime” ISA. This will allow adults under the age of 40 to save up to £4,000 each year and receive a 25% bonus on every pound they put in.
Osborne also announced that he will change tax rules so that interest from peer to peer loans can be paid by platforms without deduction of income tax from April 2017. In practice, this merely formalises the situation which currently exists – all interest is paid gross to investors who then declare it to HMRC.
Aside from other changes, Osborne has also announced an increase in the personal allowance to £11,500 and a £45,000 higher rate threshold.