Autumn Statement: Tech City UK Works to Secure New Bad Debt Relief for P2P Lending Platforms

Chancellor George Osborne Announces Introduction of New Bad Debt Relief for Lending Through P2P platforms in the Autumn Statement

Thanks to the active campaigning efforts of peer to peer lending providers including Funding Circle and Zopa, along with support from Tech City UK’s FinTech Forward Working Group, we welcome the introduction of new bad debt relief for lending through peer-to-peer (P2P) platforms, as announced by George Osborne in the Autumn Statement.

This is a significant step in the development of the P2P lending sector and testament to the efforts of P2P providers Zopa and Funding Circle, both members of Tech City UK’s Future Fifty programme, and Tech City UK’s role as a conduit between technology entrepreneurs and senior government to support the development of the sector. The announcement will have a significant impact on:

Fuelling the growth of peer-to-peer lending, which will help to drive competition in the banking sector  and boost small business and consumer lending
Creating a level playing field between peer-to-peer lending and other investments

Created in June of this year and chaired by Nezahat Gultekin, Tech City UK’s FinTech Forward Working Group is composed of experts across the FinTech value chain, including senior executives from disruptive FinTech companies, investors, FCA Project Innovate, Innovate Finance, banks and exchanges. The group identified tax treatments of bad debts through P2P lending, as one of the top three issues to be addressed to support FinTech growth.

Giles Andrews, Zopa CEO and Co-Founder commented:

“It’s great to see the Chancellor tackling an out-dated tax law that disadvantages alternative financial models like peer-to-peer lending. Overturning this tax law means thousands of consumers will keep more of their returns from lending as they will now be able to offset any losses against their P2P interest when calculating tax due on that interest. Zopa as part of the P2PFA has worked closely with Tech City UK and its FinTech Working Group who have supported this reform by campaigning hard on this issue and collectively we very much welcome this important change. This is a progressive reform from the Treasury that reflects the growing importance of the UK’s alternative financial services sector.”

James Meekings, Co-Founder of Funding Circle said:

“This change in the tax system will make lending to small businesses via our marketplace much fairer for individual investors, putting them in an equal position to larger lenders such as banks. We have campaigned for this change since we launched four years ago and are particularly grateful for the specific support we received around this issue from Tech City UK – as part of the Future Fifty programme. More than 35,000 people currently lend through Funding Circle and the average investor could earn up to 25% more overnight per year as a result of this change. This could potentially be significantly higher depending on an individual’s investment strategy. It will have a hugely positive impact on the peer-to-peer lending industry and is a win-win-win for investors, borrowers and the economy at large.”