Do you pay tax on peer-to-peer lending?

The Innovative Finance ISA (IFISA) - also known as the peer-to-peer (P2P) ISA - was introduced by the UK government in April 2016, and it allows investors to hold P2P loans (and debt-based securities) without paying tax on any returns. 


Investors are able to invest up to the annual ISA allowance - which is £20,000 in 2020/21 - through an IFISA each tax year. 

Read more:download the IFISA guide

If you decide to invest in P2P lending outside of an IFISA - and you exceed the personal savings allowance* - any income you receive from your P2P investment will be taxable as income through a self-assessment form at the end of each tax year. For this reason, it’s advisable to look into holding your P2P loans in an IFISA, so you can benefit from the popular ISA tax wrapper.


*The personal savings allowance enables basic-rate taxpayers to earn up to £1,000 of tax free interest, and high-rate taxpayers to earn up to £500 of tax free interest per year. 



CARLTON Bonds are an IFISA provider specialising in fixed term property bonds.

Against a backdrop of low interest rates and a volatile stock market, the IFISA can provide an attractive investment opportunity for experienced investors. 

With the ability to hold peer-to-peer loans and debt-based securities, IFISA investments have the potential to generate higher rates of return than more traditional investment routes for investors with a greater appetite for risk.

To find out more, download our free IFISA guide.

The Innovative Finance ISA Guide