The Autumn Statement, or Pre-Budget Report as Labour used to call it, is normally not a time of great excitement. But with a General Election just six months away, it was hardly surprising that George Osborne managed to offer voters a few sweeteners as well as some apparently positive economic news.
Changes to stamp duty grabbed a lot of the headlines, as we’ll discuss below, but customers of Zopa and other peer-to-peer lenders will be pleased to hear that the Treasury plans to make their lives a bit easier.
Boost for P2P
Buried in the small print of Wednesday’s statement was the news that P2P lenders will be able to offset any losses from bad loans against their income – and therefore cut their tax bills – from next year. Claims will have to be made through the self-assessment system and will apply to any losses incurred from 6 April 2015.
This will bring P2P into line with the likes of the capital gains tax system, where individuals can offset any losses from investments against profits when calculating their tax liability in any given year.
Zopa’s CEO Giles Andrews says the company, in conjunction with the P2P Finance Association, has campaigned hard for this change. “Overturning this tax law means thousands of consumers will keep more of their returns from lending,” he says. “This is a progressive reform from the Treasury that reflects the growing importance of the UK’s alternative financial services sector.” The government also wants to make it easier for institutions such as banks and building societies to lend through P2P, which is likely to broaden the appeal of these services.
End to stamp duty nonsense
While some of the changes to policy on P2P lending will help to cut people’s tax bills, they are largely just common sense. Exactly the same can be said of the long-overdue reform of the stamp duty system.
The “slab” approach to taxing property purchases, which was abolished yesterday, meant that the whole of the price of a home was taxed at its marginal stamp duty rate.
This created daft situations where the stamp duty bill on a £250,000 house was £2,500 but tax on a property sold for £250,001 was more than £7,500. The same problem applied around the £500,000 cut-off point.
Under the new system, each slice of a home’s value is taxed at an increasing rate, just like income tax:
|£0 - £125,000||0%|
|£125,001 - £250,000||2%|
|£250,001 - £925,000||5%|
|£925,001 - £1,500,000||10%|