P2P Lending Already Available In ISAs
The latest news doing the rounds is that new legislation is soon to allow peer-to-peer investment funds in ISAs, which means tax-free lending.
Thing is, ISA providers have been allowing this all along!
Hargreaves Lansdown spokesman Danny Cox has confirmed this to us. And Andy Donald, speaking on behalf of P2P Global Investments, a P2P investment fund, indicated other ISA providers have too, by telling us: “We recognise that the likes of Hargreaves have been allowing it to be held within an ISA.”
The rules were apparently unclear about whether “investment trusts” focused on P2P lending were eligible in ISAs. I have to say that the old rules look to me to unambiguously ban such investments through ISAs.
But with the legislation changing from 1 July, it's academic. ISA investors will legitimately be allowed to hold P2P lending investment trusts.
And Hargreaves Lansdown's customers and some others won't understand what the hubbub is about.
Managed funds come at a cost
If you don't buy the underlying investments yourself and instead go through investment funds, costs of investing are higher. This is because they add another few layers of charges. So tax savings from investing through an ISA will help offset the extra costs.
However, with direct lending through P2P ISAs possibly only a few extra months away – from November according to the rumour mill – you should only put your money in to these funds now if you want to pay someone else an extra fee to do your P2P lending for you for the longer run.
Read more in Lend Direct or Use P2P Investment Funds?
Also read: P2P Lending Funds, Bonds and Shares.