Income Tax Act 2007 section 412I

Meaning of "loan", "peer-to-peer loan" and related terms

Section 412I defines what counts as a "loan" and a "peer-to-peer loan" for the purposes of the peer-to-peer lending tax relief rules, and sets out the related terms "personal loan" and "small loan".

• A "loan" must be made on genuine commercial terms and must not be part of an arrangement whose main purpose is to obtain a tax advantage.
• A "peer-to-peer loan" must be made or received by qualifying persons (individuals, small partnerships including at least one non-corporate member, or unincorporated bodies with at least one non-corporate member), and the lender must be liable to income tax on any interest from the loan.
• A "personal loan" is one that is not used wholly or predominantly for a business carried on, or intended to be carried on, by the borrower.
• A "small loan" is a loan of £25,000 or less.