To claim relief on peer-to-peer (P2P) loans for the current tax year (2016/17), you will need to make a manual reduction before entering figures onto the return.
Please see the guidance published by HMRC (Income tax relief for irrecoverable peer to peer loans guidance) for more information. Specifically, page 14 states that for 6 April 2016 to 5 April 2017:
The lender can also claim relief on P2P loans that become irrecoverable on or after 6 April 2017 against other interest received in the same tax year from other P2P loans that were made through the same platform as the now irrecoverable loan. This relief should be claimed in a tax return. In order to claim relief in a tax return the lender should deduct their available relief from the P2P interest that they have received in that year before entering the figure in their tax return.
Claiming relief on the tax return
Using HMRC Forms mode
Using SimpleSteps mode