Section 412A — Income Tax Act 2007: Relief for irrecoverable peer-to-peer loans

Relief for irrecoverable peer-to-peer loans 412A 1 A person (“L”) is entitled to relief under this section if—

a L has made a peer-to-peer loan (“the relevant loan”),

b the loan was made through an operator, c L has not assigned the right to recover the principal of the loan, and d any outstanding amount of the principal of the loan has, on or after 6 April 2015, become irrecoverable.

2 But if the outstanding amount became irrecoverable before 6 April 2016 L is entitled to relief under this section only on the making of a claim.

3 The relief is given by deducting the outstanding amount in calculating L's net income for the tax year in which the amount became irrecoverable (see Step 2 of the calculation in section 23).

4 The deduction under this section is to be made only from income arising from the payment to L of interest on—

a the relevant loan, and b any other loan within subsection (5) or (6).

5 A loan is within this subsection if—

a it is a peer-to-peer loan made by L, and b it was made through the operator through whom the relevant loan was made.

6 A loan is within this subsection if—

a the loan was made by someone other than L, b the right to receive interest on the loan has been assigned to L, c the right was assigned through the operator through whom the relevant loan was made, and d either—

i L is a person within paragraph (a), (b) or (c) of section 412I(4), or ii the recipient of the loan is a person within one of those paragraphs and the loan is a personal or small loan.

7 The amount deducted under this section is limited in accordance with section 25(4) and (5).

8 In this section “ irrecoverable ” means irrecoverable other than by legal proceedings or by the exercise of any right granted by way of security for the loan.