Will I pay tax on the money I make through peer to peer lending?

Nov 07, 2018

Knowledge Hub / Will I pay tax on the money I make through peer to peer lending?

Yes, after you lend out money using a peer-to-peer website, they will annually send you a statement of earned interest which you will have to declare using your self-assesment tax return. Depending on what income band you are in you will need to pay tax on the interest made.

Using a peer to peer wbesite to lend money means you will be lending your money to a group, or pool, of businesses or individuals. Doing this minimises the risk of bad debt and spreads the risk. The group you have leant to will make their repayments on a monthly basis, and you will receive your payment as income through a fixed interest rate. At any point after the month is finished you can withdraw the money, or reinvest it in to the system.


Before April 2015 you were taxed on the rate you have been quoted, not on the actual rate that you receive. For example if you were quoted a rate of 5%, but because of bad debt your actual return on investment is 3.5%, you will still be taxed at the original rate of 5%. This was not a great situation for the person who has lent the money and after much debate, in April 2015 lenders began not being charged for any income tax on savings.

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