We continue our theme of lending in difficult times with a warning shot from a couple of key players in the FinTech sector. There could be an upside to Brexit, but it may, as one of its prominent supporters said, be fifty years before we see the benefit of it. Below, we run an excerpt from a recent article in AltFi.
Fintech founders say the UK is at risk of losing its top spot as the sector’s global leader due to a mixture of Brexit concerns and industry complacency.
Almost two thirds (63 per cent) of British-based fintech owners say the UK is the centre of the global industry, but just 33 per cent believe this will be the case in five years.
The findings come from a survey by lobby group the Digital Finance Forum, which included responses from such leading UK fintechs as LendInvest, Crowdcube, Onfido and iwoca, led by chief executive and co-founder Christoph Rieche (pictured).
Fintech leaders want the UK’s new government, led by Prime Minister Boris Johnson, to create a secretary of state for technology to prevent digital innovation from slipping down the national agenda.
Historical Performance And IFISA Process Guide
That figure is the result of over £17 million of loans facilitated on the site, as we bring individuals looking for a good return on capital together with carefully vetted small companies seeking funds for growth. Bear in mind that lenders’ capital is at risk. Read warnings on site before committing capital.
All loans on site are eligible to be held in a Money&Co. Innovative Finance Individual Savings Account (IFISA), up to the annual ISA limit of £20,000. Such loans offer lenders tax-free income. Our offering is an Innovative Finance ISA (IFISA) that can hold the peer-to-peer (P2P) business loans that Money&Co. facilitates. For the purposes of this article, the terms ISA and IFISA are interchangeable.
So here’s our guide to the process:
The ISA allowance for 2019/20 is unchanged from last tax year at £20,000, allowing a married couple to put £40,000 into a tax-free environment. Over three years, an investment of this scale in two Money&Co. Innovative Finance ISAs would generate £8,400 of income completely free of tax. We’re assuming a 7 per cent return, net of charges and free of tax here.
Once you have made your initial commitment, you might then consider diversifying – buying a spread of loans. To do this, you can go into the “loans for sale” market. All loans bought in this market also qualify for IFISA tax benefits.
Risk: Security, Access, Yield
Do consider not just the return, but the security and the ease of access to your investment. We write regularly about these three key factors. Here’s one of several earlier articles on security, access and yield.