Closing today… Please note that both HT Legal Helpline (currently 69 per cent funded, yielding 7 per cent) and Harris&Co. (currently 84 per cent funded, yielding 8%) will be closing today at 5pm. Both loans offer a gross yield of 7 per cent.
Money&Co. CEO, Nicola Horlick, comments: “We have had no bad debts in this area since we started lending in May 2019. If you were to hold these two loans in an ISA, you would have a gross yield of 7.5 per cent giving a tax-free net yield of 6.5 per cent per annum after our fee. Even after the recent increases in interest rates, deposit rates and Cash ISA yields remain extremely low and so we feel that this is an attractive yield in comparison.”
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.