The authorities seem to have an ambivalent attitude towards our part of the crowdfunding world, known as peer-to-peer (P2P) business lending.
On the one hand, the government has been extremely positive about P2P, and will allow it to be included in Individual Savings Accounts (ISAs) in the next tax year (Innovative Finance ISAs, or IFISAs). See detail below.
On the other hand, the Financial Conduct Authority, the UK's top financial watchdog, seems a little nervous about allowing advisers even to mention P2P when dealing with individual investors.
See this quote from an article in ThisIsMoney, the online arm of the Daily Mail, which looks at the possible restrictions on advice and distribution: "Financial advisers may be banned from taking commission for recommending peer-to-peer investments.
"A review by the financial watchdog may mean advisers have to be more careful in their recommendations of peer-to-peer investments."
Below we reproduce an extended excerpt from the ThisIsMoney piece, which sets out the background.
A new 'innovative finance Isa' will be created at the start of the next tax year in April 2016, which will allow peer-to-peer investing to be held inside the wrapper. This means returns will be free from tax.
P2P lending ... allows savers to 'lend' money to individuals or businesses at a rate they choose, cutting out the middle man of the bank or building society and, as a result, typically earn higher returns.
Demand for it has soared in recent years, with funds invested doubling from £666million in 2013 to £1.74billion last year.
The annual limit for the new Isa has yet to be confirmed but it is expected to be announced in the Chancellor's Autumn Statement on Wednesday 25 November. As the rules currently stand for the 2015/16 tax year, individuals have a single annual allowance of £15,240 they can spread between a cash or stocks and shares Isa in any combination they wish. When the innovative finance Isa arrives, it is presumed the annual allowance will be able to be split three ways. However, the taxman could decide to give investors a separate allowance.
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