New £1,000 Tax Break When P2P Lending

Savers were given a new tax break in the Budget on Wednesday, but it wasn't clear at the time whether that was going to extend to your P2P lending.

Zopa has told us today that it just received confirmation from the Treasury that it does include P2P lending!

The following changes take effect on 6 April 2016:

Impact on basic-rate taxpayers

You will no longer be taxed on the first £1,000 of interest earned each year from savings.

In a savings account, at current interest rates, you might therefore need to have £40,000 to £100,000 of savings before you’ll be taxed.

The interest earned on peer-to-peer lending is included. This means that probably the first £10,000 to £30,000 of the money you lend each year won’t be taxed!

Impact on higher-rate taxpayers

You will no longer be taxed on the first £500 of interest earned each year from savings.

In a savings account, at current interest rates, you might therefore need to have £20,000 to £50,000 of savings before you’ll be taxed.

The interest earned on peer-to-peer lending is included. This means that probably the first £5,000 to £15,000 of the money you lend each year won’t be taxed!

Most lenders will soon pay no taxes

Zopa CEO, Giles Andrews, said:

“The news is very exciting as the vast majority of Zopa's 58,000 lenders can now lend tax free from April. I expect this will…attract a large number of new consumers to start lending and earn returns of 5+% tax free.”

Zopa is the oldest and one of the safest P2P lending companies. Read how to Get Started With the Safest Peer-to-Peer Lending Websites.

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