Is it deducted (and at what rate), or is it paid gross and you put the interest on your HMRC tax return?

I saw on an earlier post that new tax is the greatest threat to P2P lending - is something about to come to make P2P less attractive as an investment option?


It is paid gross and you must declare it to HMRC - on a return if sent one, otherwise in a letter. Zopa et al. will also declare it to HMRC like other financial institutions, so HMRC can cross-check your declarations.

The 'threat' is I think because losses from lending to private individual borrowers are not tax-deductible.
This makes loans to people other than those with A or A* grading unecononmic to higher-rate tax-payers, who are the main source of funds to P2P.
And such highly graded borrowers can often get cheaper loans elsewhere than through P2P lending.