The UK government is leading the way in promoting crowdfunding.
As well as the watchdog taking a light touch and incremental regulatory approach, HMRC's acceptance of the Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS) relief for crowdfunded investments has already made crowdfunding tax-efficient for larger investors.
Now the UK is consulting on inclusion in the ISA consumer-tax wrapper.
Chancellor George Osborne’s summer budget promises to
“introduce the Innovative Finance ISA, for loans arranged via a P2P platform, from 6 April 2016“
and this is accompanied by a public consultation on extending the list of eligible investments to include both debt and equity offered through crowdfunding platforms.
The development has been widely welcomed. Members of industry body the Peer-to-Peer Finance Association have been pressing for years to make interest from peer-to-peer loans tax-free, and the P2PFA chair was "absolutely delighted" by the announcement.
CEO and co-founder of Zopa Giles Andrews is enthusiastic too. In his view this move is
“a strong sign from the Treasury that peer-to-peer lending has become a mainstream investment option. I also expect this to bring a significant increase in the popularity of peer-to-peer lending across the UK as a result.”
The consultation calls for wide-ranging comments on the scope of crowdfunding platforms that might be included and any additional consumer protections that should be provided, as well as safeguards against abuse and tax avoidance. It will remain open until 20 September 2015.
This announcement came in the same week as news of the first exit of a company who fundraised on crowdcube. E-Car Club, an entirely electric car sharing club, has been sold to Europcar providing investors with a multiple return.
And investor confidence is clearly demonstrated by yesterday's announcement that Sugru is breaking the current crowdfunding record with the largest single investment to date of £1m.
You can learn more about crowdfunding strategy and structure at an event taking place in London on 6 October from 4.45 - 7.30pm. Get in touch if you'd like to be on the invitation list.