Going, Going... But Not Gone! Strong Demand for 8% Loan Offer
The latest, A-rated loan offer on site is already 56 per cent funded after just two days. With a gross indicative yield of 8 per cent, strong investor demand is understandable. The auction closes in just over a week, and the offering will be fully funded well before then if current interest levels are sustained. Bear in mind, lending carries risk – so do make sure you read the warnings on site before investing.
The yields on our peer-to-peer (P2P) loans is evem more attractive, if the loans are held via our Innovative Finance Individual Savings Account (ISA). This way lenders canreceive income from Money&Co. loans completely tax-free.
Just like Cash and Stocks & Shares ISAs, you can invest up to £20,000 each tax year, and you don't need to pay any personal taxes on your earnings. You can use your whole annual ISA allowance if you decide to open an Innovative Finance ISA account with Money&Co.
If you hold Money&Co. loans in an Individual Savings Account, you can expect to get an interest rate of around 7 per cent net of our fees and it will be completely tax-free. You can choose to pay out the income that is due on your loans monthly, or you can keep the money in your account to reinvest in new loans.
Fuller detail is available here.
A Process Guide To Innovative Finance ISA Investment
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:
Step 1: Register as a lender. Go to the login page, and go through the process that the law requires us to effect. This means we have to do basic checks on you to comply with money-laundering and other security requirements.
Step 2: Put money into your account. This is best done by electronic transfer. We can also process paper cheques drawn in favour of Denmark Square Limited, the parent company of Money&Co.
Step 3: Buy loans in the loan market. Once you've put cash in your account it will sit there - and it won't earn interest until you've bought a piece of a loan. It's this final step that requires lenders and IFISA investors to be pro-active. Just choose some loans - all loans on the Money&Co. site can be held in an IFISA - and your money will start earning tax-free interest.
The ISA allowance for 2018/19 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.