Recently, HM Treasury, the Department for International Trade, and Innovate Finance, joined together in publishing a report entitled “UK Fintech State of the Nation.” The report provides a snapshot perspective as to progress in the UK regarding FinTech, as well as providing a roster of ongoing programs created to ensure the UK’s position as a global FinTech hub.
The policy supporting Fintech holds greater relevance in light of the political struggles associated with Brexit and the looming European separation.
So what has the UK achieved?
The document provides the following data points:
To quote Stephen Carney of Quintain Analytics – referenced in the report:
“Being a heavily regulated industry, conservatism and fear of change can often stifle innovation, however, UK financial services firms have embraced new technology much faster than other centres.”
A Process Guide To Innovative Finance ISA Investment
Money&Co. lenders have achieved an average return of more than 8 per cent gross (before we deduct our one per cent fee). That figure is the result of more than £15 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.