We sort your Self Assessment for you. £119, all in.

Fast, effortless and 100% online.

We sort your Self Assessment for you. £119, all in.

Peer-to-peer loans

Peer-to-peer loans (sometimes called “P2P loans”) are a kind of loan made through websites that match individual lenders with borrowers. They are done without a bank being involved in the process.

Interest earned through peer-to-peer loans get taxed just like interest from savings accounts:

  • if you’re a basic rate taxpayer, your first £1,000 from peer-to-peer interest is tax-free (this is called the “personal savings allowance”)
  • if you’re a higher rate taxpayer, this gets reduced to £500
  • additional rate taxpayers don’t get a savings allowance
  • anything above this personal savings allowance, you pay tax at the usual Income Tax rate.

Other things that you might need to know about P2P loans:

  • some P2P lending websites also offer Innovative Finance ISAs (IFISA) for P2P loans. Any money you receive from them is entirely tax-free
  • if you sell a P2P loan for a profit, you might need to pay Capital Gains Tax on it
  • if one of your borrowers defaults (won’t pay you back), then you can claim it as “bad debt” and offset it against your income from other P2P loans.

We sort your Self Assessment for you. £119, all in.

Fast, effortless and done for you online – the way tax returns should be done. Free to sign up.