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Benefit from tax-free lending at Zopa

Posted on 29 Mar 2016 by Natasha Wear

After launching our three new lender products earlier this month, we wanted to give our lenders a bit more information about the how to earn tax-free interest with Zopa, thanks to the UK tax reforms which will come into effect in the new tax year.

Our three new products – Zopa Access, Zopa Classic and Zopa Plus – have been designed with our customers in mind. These products offer you a choice of:

  • Fee-free access to your money and Safeguard cover (Zopa Access)
  • Higher predicted returns and Safeguard cover (Zopa Classic)
  • Access to a wider range of risk markets and no Safeguard cover in exchange for higher projected returns (Zopa Plus)

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All of these products will be available with the added benefit of tax-free interest – either through an Innovative Finance ISA or by putting your earnings at Zopa towards your new Personal Savings Allowance.

ISA allowance

Below, we’ve pulled together an illustration of the projected interest you might receive and how much tax you would save if you invest your full annual tax-free allowance of £15,240 in a Zopa ISA.

If you already have money saved in an ISA from previous tax years, you’ll be able to transfer them over to Zopa and continue to earn tax-free interest.

All peer-to-peer lenders with full FCA permissions will be able to offer an Innovative Finance ISA from the 2016/17 tax year. Along with other peer-to-peer lending companies, we are currently waiting for approval from the FCA before we can apply for ISA manager status. Once we have heard back from the FCA we will be in touch with more information on how customers can apply for a Zopa ISA.

Personal Savings Allowance (PSA)

The PSA will provide everyone with an annual tax-free allowance of £1,000 (or £500 for those who pay income tax at 40%). This scheme is independent of ISAs – any money you save in an ISA wrapper does not contribute to this allowance.

Below, we give an estimate of how much money you could lend in each product, at current market rates, in order to benefit from the PSA:

Read the government factsheet about the personal savings allowance.

Category: Industry news
Tags: lender products, innovative finance isa, personal savings allowance, isa, tax-free

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