Tax Certificate Tool - Interest and claiming tax relief on unpaid loans.

Tax is on Interest earned from Lending on Loans (Select invest and Auto Invest) 

Following are all ticked when downloading Tax Certificate. Please be sure to unclick those that are not required for your TAX CERTIFICATE (Please seek professional advice from your accountant):
1) Interest Select;
2) Interest Auto;
3) Cashback;
4) Commission; and
5) Secondary Market Fees. 


Interest from Innovative Finance Individual Savings (IFISA) Accounts does not count towards your Personal Savings Allowance because it’s already tax-free.

Cashbacks and commissions are generally excluded from Tax Statements, but a bespoke Statement can be generated should you require this from the Tax Statement Tool. Please seek professional advice from your accounts in regards where Commission and Cashbacks need to be declared in regards your Annual Self Declaring Tax Assessments. 

Following is a Link that may help for UK tax. 
Personal Savings Allowance: Guidance (Updated 25 January 2018)*

Claiming tax relief on unpaid loans

If a peer to peer loan isn’t repaid the lender can set the loss they suffer on the loan against the interest they receive on other peer to peer loans before the income is taxed.

Tax relief is available to peer to peer lenders who:

  • are liable to UK Income Tax on their peer to peer income
  • make loans through peer to peer lending platforms that are authorised by the FCA
  • are the legal lender at the time when it is agreed that the loan has gone bad

When relief can be obtained

Tax relief applies when there is no reasonable prospect of the peer to peer loan being repaid, it doesn’t apply to late payment.

The amount of relief available is the peer to peer loan still outstanding from the borrower, less repayments already received.

Relief for bad debts on peer to peer loans can only be set against interest that the lender receives on other peer to peer loans, it cannot be used against any other form of income.

If a debt is recovered after relief is given

If a lender has received relief for a bad debt on a peer to peer loan that is repaid at a later date (for example if the borrower manages to pay late, or if there is recovery of assets), the amount is treated as new peer to peer income of the lender.

When the relief will apply

Peer to peer lenders who suffer bad debts on peer to peer loans from 6 April 2015 will be able to claim relief in their tax returns.

Peer to peer lenders who suffer bad debts on peer to peer loans from 6 April 2016 and relief conditions are met, may also set these bad debts against interest received on other peer to peer loans made through the same platform without needing to make a claim.

Further information can be found in HMRC’s guidance on Income Tax relief for irrecoverable loans.*


Peer to peer Lending : Guidance (Published 6th April 2016)*

*(The links given might be outdated so, Please seek professional advice ).