The performance of the alternative finance sector in the UK has been strong. Regular readers will know that we expect more inward investment and lots of interesting deals in alternative finance generally – and platform lending in particular – this year.
The UK has secured its place as the top destination for European fintech investment for another year, reaching a new record of $4.9bn.
Venture capital and private equity investment into the UK’s fintech sector has risen 38 per cent year on year, exclusive data from Innovate Finance today revealed. This was more than three times the amount Germany received in second place at $1.3bn, and six times more than Sweden in third at $778m.
Globally the UK only came second to the US, which netted $16.3bn across 1,095 deals. India came in third place with $3.9bn for fintech startups, while China dropped to fourth place at $1.8bn after suffering a 93 per cent decrease year on year.
Yes You Can, rated B, for £30,000 with an 11 per cent fixed yield, is currently 39 per cent subscribed. More loan offerings will land on site soon.
Historical Performance And IFISA Process Guide
That figure is the result of over £19 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.