The news that the peer-to-peer lending sector has been holding its breath for has suddenly arrived. ISA eligibility will be extended to include p2p loans.
Chancellor of the Exchequer George Osborne announced the news in today’s Budget, and suggested that government is also considering the addition of other forms of alternative finance to the list of qualifying investments.
The statement is as follows:
“The list of qualifying investments for Isas will be extended to include peer-to-peer loans.
“The government will continue to explore further extending the list to include debt securities offered via crowdfunding platforms.”
"This is great news for investors – returns for higher rate taxpayers who use part of their ISA allowance for peer-to-peer lending will increase by as much as 91% thanks to the Government’s decision. Platforms such as Assetz Capital, which has an average return to date of 12.7% before taxes, will become even more attractive to investors.
"This, combined with FCA regulation due on 1 April 2014 shows that P2P lending has truly entered the mainstream, and will soon become a key part of the majority of investors’ portfolios. It will also increase lending to British SMEs and property developers, giving the productive economy a further boost.”
Christian Faes, Co-Founder of LendInvest, also commented:
"George Osborne's announcement that ISAs will be extended to include peer-to-peer loans, is a huge vote of confidence from the government on the future potential for P2P.
In the current environment, investors are being starved of yield and are in desperate need of alternatives. Including P2P in the ISA scheme will be a great way for investors to diversify their investments, and to start getting a decent return on their hard earned savings."
Daniel Rajkumar, Founder and Managing Director of Rebuildingsociety, echoed those sentiments:
"We're delighted that p2p will be included in ISAs. It rewards those who have backed the market from the outset and incentivises the next wave of p2p lenders into the market. On top of impending regulation, which the industry has also lobbied hard for, this is a pivotal couple of weeks for the peer-to-peer lending market."
Co-Founder of Funding Circle James Meekings said:
“This news is a huge win for British investors up and down the country, and represents a seminal moment for our industry.
“The inclusion of peer-to-peer lending in ISAs ensures British people earn inflation-beating, tax-free returns whilst helping support the country’s economic recovery.”
Graeme Marshall, Chief Executive of FundingKnight, also weighed in:
“Its great to see that today’s budget announcement confirms peer to peer loans will now qualify to be included as an investment within ISAs and it is a huge sign of confidence in the peer to peer industry. We hope it will broaden the relevance of peer to peer lending to a wider audience of savers and investors. It will also give our existing FundingKnight investors an alternative way to invest with us.”
“We welcome today’s news that ISA eligibility will be extended to peer-to-peer loans. The government is clearly acknowledging that something must be done to breath fresh life into this failing sector as one of the poorest ISA seasons on record comes to a close. Research has shown that a third of savers would consider P2P ISAs*, so this news could truly reinvigorate the ISA sector. The change has the potential to give cash-strapped retirees and young people struggling to get on the property ladder the return on their savings investments that they really need.”
*1 Peer-to-Peer Isa Survey, Populus, compiled January 2014.
Giles Andrews, CEO of the UK's first and largest p2p lender - Zopa, commented:
"Peer-to-peer ISAs are a game changer for UK savers. They will earn three times more interest; tax free, than from the disappointing low rate cash ISAs available from banks, without having to rely on the riskier stocks and shares ISA options currently available. With Zopa's predictable, low-risk 5% returns for everyone in the UK, we can create a whole new generation of ISA millionaires. You will no longer have to be in the lucky minority to retire with a million pound ISA pot. Peer-to-peer ISAs will be transformational for people's lives and future generations."
The reactions are coming in thick and fast, and we’ll to continue to gather them here throughout the day. This is a huge moment for the p2p industry – one that will continue to lift the sector into the mainstream.
AltFi is returning to Amsterdam for its second annual Summit in the city. The inaugural event last year was a roaring success, with key figures from across Continental Europe's alternative finance and digital banking sectors highlighted. These included Jeroen Broekema, managing director of Funding Circle Netherlands, and Mieke van Engelen, head of innovative partnerships at ABN AMRO's standalone lending platform, New10.