P2P lending within an ISA by 2015?

It is an interesting development - not least for the platforms. It was more interesting to participate in the offering than to buy now it is listed - currently to buy there is a headline spread of 3% so you could now be paying 107p for every 98.5p of NAV and the vehicle is also not fully invested at launch.

Another consideration is the targeted 6-8% payout yield. Looking at the longer-term market rates on Zopa, Ratesetter and given the fee structure of the trust this means that if the trust does not have access to preferential rates vs. ordinary investors it could well have to load up on those whole loans offered from the higher risk categories on platforms such as FC and/or systematically employ leverage (up to 33% of NAV) to meet the upper end of the target returns. No (current) liquidity for whole loans + above average risk profile of underlying loans + leverage could prove to be an unhelpful combination. Either that or those potential platform stakes had better be worth something.

That is trading at a c25% premium to the end of March 2014 NAV and so discounting some value for SME investments. Possible candidate for a secondary offering (especially with the apparent terms of the share option plan)?

Not for me & certainly not at the premiums mentioned here. One can make much better returns with a little bit of time & effort sourcing loans directly from the various platforms & learn a little bit along the way too. Besides, if it invests in FC, it certainly isn't appealing to me

Budget update:

There is not much on p2p ISAs or bad debt relief in the budget. In summary:

- a response to the ISA consultation should be out in the summer
- draft legislation on bad debt relief will be published this year and (if enacted) will have effect for loans made after April 2015.

Which we knew already.

Below are the words from the horse's mouth (or other end if you prefer ):

In the budget "red book"
www.gov.uk/government/uploads/system/uploads/attachment_data/file/413949/47881_Budget_2015_Web_Accessible.pdf

1.226 Following technical consultation with the financial services industry, the government
will extend the range of ISA eligible investments in 2015-16 to include listed bonds
issued by a co-operative society and community benefit society and SME securities
issued by companies trading on a recognised stock exchange. The government will
also explore further extending the list to include debt and equity securities offered
via crowd funding platforms, and will consult in summer 2015 alongside a response to the
consultation on how to include peer-to-peer loans."

2.83 Extending ISA eligibility – The list of qualifying investments for ISAs will be extended
to include listed bonds issued by a co-operative and community benefit society and small and
medium sized enterprise (SME) securities (not just equities) admitted to trading on a recognised
stock exchange from summer 2015. The government will explore further extending the list
to include debt (as announced at Autumn Statement 2014) and equity securities offered
via crowdfunding platforms and will consult in summer 2015 alongside a response to the
consultation on how to include peer-to-peer loans. [seems to repeat the previous para]

2.89 Bad debt relief on investments made through the Peer-to-Peer (P2P) lending
industry – As previously announced at Autumn Statement 2014, the government will introduce
a new relief to allow individuals lending through P2P to offset any losses from loans which go
bad against other P2P income. It will be effective from April 2016 and through self assessment
will allow individuals to make a claim for relief on losses incurred from April 2015.

In HMRC's overview of tax legislation
www.gov.uk/government/uploads/system/uploads/attachment_data/file/414197/OOTLAR_2015_v1.1.pdf

2.7. Bad debt relief on peer-to-peer lending. As announced at Autumn Statement 2014, new legislation will be introduced to allow individuals who make loans through peer-to-peer (P2P) platforms to offset bad debts arising against the interest they receive from P2P loans when calculating their taxable income. These changes will have effect for loans made from 6 April 2015. Legislation will be included in a future Finance Bill and the government will publish draft legislation in 2015. A technical note will be published shortly after Budget.

Just picked up on this(from pikestaff 's post)

- draft legislation on bad debt relief will be published this year and (if enacted) will have effect for loans made after April 2015.

Does that mean that loans made in 2014 (e.g. Plumber) will not be eligible when the losses eventually become quantified?

That is my understanding.  Instead, you'll have to declare a capital loss when it is settled and use that to offset some future taxable capital gain - I understand the loss can be carried forward indefinitely until used up.  Give the capital gains allowance is non-trivial (£10k or more - I can't recall exactly), you'll have to dispose of something substantial in order breech that limit and make use of the earlier loss....but you have a lifetime to build the gain first.

Good to hear the initial view is that p2p interest will be included in the savings allowance as it seemed to indictae traditional savings only , '' Budget 2015

announces that the automatic deduction of 20% income tax by banks and building
 societies on non-ISA savings will cease from April 2016.'' from the red book. So it would seem that P2P will remain paying gross interest in the future.

It appears that interest in excess of £1000 will be collected through PAYE,  ''(HMRC) will introduce automated coding out of savings income that remains taxable through the Pay As You Earn system from 2017 to 2018 with pilots starting in autumn 2015.'' from HMRC's overview. Extra problems, no doubt for basic rate taxpayers given the problems with codings over the last few years.