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| Government to consult on new peer-to-peer lending ISA | |
| (about 9 hours later) | |
| The government is considering a separate tax free individual savings account (ISA). | |
| The plan is to create one for people who lend money directly using peer-to-peer lending sites, adding to the two longstanding ISAs for cash and shares. | |
| Peer-to-peer websites, like Zopa and Ratesetter, accept money from savers which they then lend out to individuals or businesses. | |
| Often they attract an above-average return, albeit with more risk. | Often they attract an above-average return, albeit with more risk. |
| The idea has snowballed: £1.6bn has been loaned through such sites so far. | The idea has snowballed: £1.6bn has been loaned through such sites so far. |
| Money protection | Money protection |
| Chancellor George Osborne announced in this year's Budget that in future the loans would qualify to be included in ISAs, making the interest received tax free. | Chancellor George Osborne announced in this year's Budget that in future the loans would qualify to be included in ISAs, making the interest received tax free. |
| But there was a question mark over how it would be done. Unlike the bank deposits in Cash ISAs, the new ISA is not protected by the Financial Services Compensation Scheme. | But there was a question mark over how it would be done. Unlike the bank deposits in Cash ISAs, the new ISA is not protected by the Financial Services Compensation Scheme. |
| The lending could also be placed in a stocks and shares ISA, although whether that is suitable will be one of the ideas the government will explore. | The lending could also be placed in a stocks and shares ISA, although whether that is suitable will be one of the ideas the government will explore. |
| The Treasury is launching a consultation on a proposal to create a third and different ISA for peer to peer lending, in a move which could propel the concept into the front rank of financial options. | The Treasury is launching a consultation on a proposal to create a third and different ISA for peer to peer lending, in a move which could propel the concept into the front rank of financial options. |