We are still in a phase of looking at the observable short-term knock-on effects of the pandemic. Our friends at Crowdfundinsider report on one of them. See the short excerpt below.
The United Kingdom has long been a top global Fintech hub – a title it is keen to maintain. The combination of a pretty supportive policy environment, a market economy, and a risk-taking entrepreneurial class, has fueled a Fintech boom. More recently, Brexit has challenged the ecosystem but according to recent numbers, Fintech funding is charging forward in spite of any challenges.
According to a note from Innovate Finance, venture funding of Fintechs in the UK is at record levels. During the first 6 months of 2021, a new record was set for the UK with $5.7 billion of venture capital invested across 317 deals. Contrasting the first half of 2021 with past years and the comparison is dramatic. In 2020, $4.3 billion in VC funding was delivered to UK Fintechs. In 2019 (pre-COVID) a record amount of $4.6 billion was provided to UK Fintechs. In brief, UK is still the King of Fintech in Europe.
Historical Performance And IFISA Process Guide
That figure is the result of over £24 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.