At the annual presentation of the budget to the House of Commons, Chancellor of the Exchequer George Osborne checked off a wide ranging list of successes as the UK economy has segregated itself from much of the rest of Europe.  The contrast between the years of the Great Recession remain stark for all, but according to Osborne the UK has entered a new phase of growth and innovation.  Osborne asserted that Great Britain has “grown faster than any other major advanced economy in the world” at 2.6% and “more people have jobs in Britain than ever before”.  Osborne expects economic growth to be around 2.5% for 2015.

George-OsborneOsborne has called for the UK to be become the epicenter of FinTech innovation for the world. He highlighted the importance of the financial industry stating, “Financial services are one of Britain’s most important and successful industries, employing people in every corner of the country”.  The Chancellor targeted the importance of innovation for the economy saying, “…since we aim to be the most prosperous major economy in the coming generation, we must support the latest insurgent industries…”.

While not addressing the forthcoming inclusion of Peer to Peer assets in ISA’s directly, the Chancellor emphasized the importance of retirement savings and affirmed his intent to improve the environment for savers with several different policy initiatives including a “radically more flexible ISA” and people who have “paid tax once on their money when they earn it. They shouldn’t have to pay tax a second time when they save it”.  He declared, “This Budget takes another step to move Britain from a country built on debt, to a country built on savings and investment”.

The UK will soon cut corporation tax to 20% (one of the lowers in the world), emphasizing the importance of tax policy on creating a competitive environment for business. Noting that 12 million people and small businesses now complete a complicated tax return Osborne said “We will abolish the annual tax return altogether… A revolutionary simplification of tax collection. Starting next year.”


Commenting on the Chancellors speech, Louis Beaumont of GLI Finance stated;

“We welcome the Government’s commitment to driving more competition within a sector that has for too long created and benefitted from a structural flaw in the credit ecosystem. Traditional lenders are ill-equipped to meet the financial needs of high growth SMEs operating in a knowledge-based economy. Rapidly growing alternative finance providers have done a remarkable job in starting to fill this gap, battling against a tide of low awareness levels and a reluctance amongst incumbents to engage in constructive debate. We’re delighted that there is appetite to develop a supportive framework in which knowledge can be shared and a more level playing field created to help further support the recovery of the UK economy.”

“…the government’s decision to extend the range of investments eligible for ISAs in 2015-16 and in particular its decision to hold a consultation on how to include peer-to-peer loans. Whilst this would represent a huge step forward for the industry, it must be accompanied by proper regulation and oversight. As an industry, we must ensure that when the inevitable happens and a platform does blow up, any resulting loss of investor confidence does not signal the end of a sector which is beginning to fill a critical gap in the credit ecosystem.”

Samir Desai 2

“It’s fantastic that the 37,000 people lending to small businesses through Funding Circle will be able to offset their losses from April. This change in the tax system will make lending much fairer for individual investors, putting them in an equal position to larger lenders such as banks, and boosting the average investor return by up to 25% per year overnight. We also look forward to further discussion around a third ‘Lending ISA’ over the coming months.”


The Peer to Peer Finance Association (P2PFA), the representative group of the direct lending industry, chimed in, adding their voice to shift to a savings economy;

“We are delighted that today’s Budget continues to signal Government support for the inclusion of peer-to-peer lending within the ISA wrapper. This is undoubtedly a positive step. How this is done will be critical to the success of these reforms. Placing P2P lending within the existing stocks and shares wrapper is bad for consumer choice and fails to recognise the distinct difference between P2P loans and equities. A recent survey conducted by the P2PFA show 74 per cent peer-to-peer lenders like the idea of a separate lending ISA and 81 per cent believe a Lending ISA (LISA) would introduce more choice across the investments market. We urge the Government, whoever that is this summer, to listen to the clear wishes of consumers and deliver the LISA.

Rhydian Lewis, CEO of Ratesetter shared his opinion;

“Peer-to-peer investors will have to wait until the summer for confirmation of the exact details of how P2P lending will work within ISAs.  Maybe the Chancellor is buying some time to properly consider the Lending ISA, which after all, would be a game changer for the industry”

“LISAs would offer a much needed middle ground between low yield cash and high risk investments, opening up choice for consumers, reinvigorating a tired ISA market and allowing a higher return on their investments*

“Nevertheless, we expect our lenders to take full advantage of the rabbit that Osborne has pulled out of the Chancellor’s hat – the £1,000 tax free interest that lenders can earn.”

Osborne did discuss the deficit, a nagging issue, stating “it’s still far too high – and it must come down”.

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