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Sam
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Category: Tax
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there, If I take out a mortgage on my primary residence

Resolved Question:

Hi there,
If I take out a mortgage on my primary residence (currently no debt attached), and lend the money to businesses through peer-to-peer lending, can I offset the interest on my mortgage payments against interest received on my business loans for income tax purposes? I know that this would be the case if I borrowed to invest in buy to let property but unsure if the same applies to business lending.
Many thanks
James
Submitted: 2 years ago.
Category: Tax
Expert:  Sam replied 2 years ago.
Hi
Thanks for your question, I am Sam and I am one of the UK tax experts here on Just Answer.
As peer to peer lending is making an investment - without any tangible asset, then the interest suffered on any monies borrowed is yours to bear and cannot be offset against the potential interest (return of investment) you earn back on the lending.
So the answer is no - this is not permitted as this is never treated as trade.
Thanks
Sam
Sam and other Tax Specialists are ready to help you
Customer: replied 2 years ago.

Hi Sam,

That's great thanks. One follow-up question if I may...

I understand that there are scenarios with peer to peer lending where I might be considered by HMRC as carrying out a money lending trade rather than an investment (eg if the activity is large, takes a significant proportion of my time, is carried out in an organised way etc). Although this may then have NI implications, would I then be able to offset mortgage interest payments?

Thanks

James

Expert:  Sam replied 2 years ago.
Hi James
No you will never be treated as a money lending trade, as you do not set the rates of interest charged, and can easily make a loss as well as profits, so HMRC treat this form of lending as merely investments and not trade. Plus you choose who to end to rather than it open to anyone that fits set criteria (such as sufficient income to afford the agreed loan repayments with interest)
So this is not trade income and will not be considered so, unless you are a set organisation that operates to all and anyone with some of the criteria as advised above.
No peer to peer or crowd funding ventures will ever be treated as trades, so you will sadly never be able to offset the interest element of the loan repayments
Sorry the news is not more favourable
Thanks
Sam
Customer: replied 2 years ago.

Understood, that's great. Thanks for your responses!

James