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HMRC internal manual

Savings and Investment Manual

Peer to peer lending: Who can receive peer to peer tax relief?

This relief is available for a person who has made a peer to peer loan through a regulated platform.

This means that the person who made the loan through the platform is entitled to the relief, unless they have assigned the right to recover the principal of the loan to another person

Assignments

If the person who made the original loan through the platform has assigned the right to recover the principal of the loan to another person in exchange for a payment, the person to whom the right has been assigned and holds that right at the point at which the loan is treated as becoming irrecoverable, would then be entitled to any relief.

However, in a case where a person has acquired the loan for consideration, the amount that they can claim is then limited to the amount that they paid for the right to recover to be assigned to them, less any amount of the principal already recovered (more detail in Amount of peer to peer tax relief).

Beneficially held loans

The legal lender of the loan is the person who will be eligible for any relief. If the beneficial owner of the loan does not hold the loan directly, and instead holds the loan through a tax transparent entity or structure (such as a fund or a partnership) then the beneficial owner will not be eligible for any relief.

Bare trusts and nominees

There is an exception to the rule that this relief is only available to the legal lender in the case of loans held by a nominee or bare trustee for another person. In these cases the person for whom the loan is held will be treated as the lender and will be the person entitled to claim any tax relief.

This is only the case for loans held by nominees and bare trustees, it does not apply for any other legal structure such as discretionary or conditional trusts.

In the case of a loan held by a nominee or a bare trustee for another person it is that other person that would have to meet all other relevant conditions, such as being subject to UK Income Tax on their income from the loan.