Investment trusts investing in peer-to-peer lending have become eligible for ISAs after changes were announced by HMRC.

The Association of Investment Companies said it was pleased the Government had listened to its recommendation earlier this year to change the rules to widen eligible ISA investments.

The inclusion of p2p loans into ISAs was part of the 2014 Budget, with the Government saying that the aim was to increase choice for savers about how they invest.

Investment trusts invested in p2p lending were not eligible but HMRC last month said it had decided to drop this and the changes begin from today.

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Guy Rainbird, public affairs director at the Association of Investment Companies, said: “The investment company sector has responded quickly to the growth of peer-to-peer financing.

Recent fund launches give retail investors the opportunity to access this market in a way which spreads their risk and gives them the benefit of expert due diligence.

“Given the Government’s decision to let direct investors hold peer-to-peer investments in their ISAs it made sense to adopt the same approach where they chose to invest via an investment company.”

The move showed the Government’s determination to make sure that tax favoured investment keeps pace with market changes, he believes.

In an explanatory note on the statutory instruments, HMRC officials explained the amendments that have been made.

The document stated: “Regulations 3 and 4 amend provisions concerned with investments which are qualifying investments for the purposes of a stocks and shares ISA to provide that securities issued by registered societies and securities admitted to trading on a recognised stock exchange in the European Economic Area are qualifying investments for the purposes of a stocks and shares ISA.

“Regulation 4 removes the requirement of the principal regulations that not more than 50% in value of the investments in an investment trust can be securities which do not qualify as ISA investments.

“Regulation 5 requires an account manager to provide separate information to HMRC concerning securities listed on the official list of a recognised stock exchange and securities admitted to trading on a recognised stock exchange in the EEA.”