The end of the tax year is approaching and you must use your ISA allowance by midnight on 5 April or you will lose it. The ISA allowance for 2020/21 is £20,000 if you are a UK taxpayer. With the bank holidays falling this Easter week end, the time to act is really by close of play tomorrow.
We currently have two grade A+ loan offers just landed on site. Both have yields of seven per cent. At the time of writing, Bonnington Law, with a 12-month term, is 97 per cent funded. The Mar-Key Group is 39 per cent funded and has a term of two years.
The Money&Co. Innovative Finance ISA allows you to receive interest on your loans completely tax free. Since Money&Co. started lending on 29 April 2014, we have achieved an annualised return (net of fees and bad debts) of 7.34% per annum. According to our calculations: over the same period, the FTSE 100 has returned nothing and the FTSE All-Share has returned just 5% over the entire period against a cumulative return from Money&Co. of 64%.
If you do not have a Money&Co. ISA and you would like to open one, please click on the green tab at the side of the home page at www.moneyandco.com and it will take five minutes to open one. You will need your NI number. You don’t have to commit to a loan to qualify for this tax year’s ISA allowance – just transfer the money before the end of the tax year.
Historical Performance And IFISA Process Guide
That figure is the result of over £26 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 2020/21 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.