End of ISA Saga in Sight?

Chancellor George Osborne’s impending budget could prove critical for the UK peer-to-peer lending sector.

We’re barely four months removed from Mr. Osborne’s last budget, but the Chancellor will unfasten the red box for the second time in 2015 on Wednesday next week. The expectation is that Osborne will announce concrete plans relating to the implementation of the P2P ISA.

A consultation on the very issue of how best to structure the P2P ISA ran for a month from October 2014. The March edition of the Budget promised to issue a response to that consultation in the summer of 2015. Most suspect that this “response” will come packaged up in Wednesday’s Budget.

Rhydian Lewis of RateSetter commented:

“We look forward to the Chancellor finally giving the thumbs up to including peer-to-peer lending in ISAs in the Budget.  Hard-pressed investors deserve better than the pitiful rates currently offered by cash ISAs.”

That statement alone makes the Budget on Wednesday essential viewing for anybody involved in the peer-to-peer lending space.

The most likely outcome of the government’s response to the consultation is that a newly-minted “Lending ISA” will be ushered into being, allowing P2P investments to be held within ISAs that are distinct from Cash ISAs and Stocks and Shares ISAs. This third ISA type has long been lobbied for by the platforms, by industry observers (such as Brewin Dolphin) and indeed by individual P2P investors (as demonstrated by a recent P2PFA survey).

The chatter at last week’s early morning gathering of P2P CEOs seemed to confirm the notion that the advent of the “LISA” (Lending ISA) is now a foregone conclusion. Will the Chancellor put it beyond all doubt on Wednesday?

For context, a short summary of the P2P ISA saga to date:

• March 2014: Osborne first confirms that ISA eligibility will be extended to include P2P loans.
• June 2014: The Treasury confirms that it will launch a consultation into how best to structure the P2P ISA.
• October 2014: The month-long consultation begins.
• February 2015: Wellesley & Co. jumps ahead of the game, launching a Stocks and Shares ISA eligible bond.
• March 2015: Osborne’s last budget promises that a response on the matter of P2P ISAs will be issued in summer 2015.
• June 2015: ISA eligibility for P2P-focused, listed investment trusts confirmed.