Income Tax Act 2007 section 888E

Interest on certain peer-to-peer lending

Section 888E exempts interest payments on peer-to-peer loans from the normal requirement to deduct income tax at source, provided the lending is arranged through an FCA-authorised platform operator.

• Interest paid on peer-to-peer loans is exempt from the usual duty to deduct income tax at source under section 874.
• Peer-to-peer lending is defined as credit where borrower and lender are brought together by an operator running a regulated electronic lending platform.
• The platform operator must be carrying on an activity specified in article 36H of the Regulated Activities Order and must hold FCA authorisation under Part 4A of FISMA 2000.
• HMRC has the power to amend this section by regulations if the underlying regulatory framework changes in future.