Diversity Is Key To P2P Consolidation - Plus Inheritance Tax Latest
There's been some head-scratching in analytical quarters as to why the long-predicted consolidation in the peer-to-peer (P2P) lending sector hasn't materialised. The answer from one commentator is a lack of diversity in product offering among some P2P players.We think that's a sensible argument. Diversity in product offering – and in the loans on offer on a platform – is always desirable.Below, we reprise a comment we particularly agree with, excerpted from an article in P2P Finance News.
Matt Hopkins, an audit director at BDO specialising in fintech, said the market landscape has changed in recent times. He predicts the two halves of the marketplace will go in different directions. He does not expect to see much consolidation within consumer-to-business lending platforms – their options will be "to be a niche player with a differentiated product, collaboration with a marketplace provider, or disappearance".He noted there is a significant group of small players but they are unlikely to become M&A targets. If they are to survive, they will need a unique model which sets them apart from competitors."If small, mono-product P2Ps are expecting advances from other players as part of an exit event strategy, they are likely to be disappointed," he said. "Since the collapse of mini-bond provider London & Capital Finance, I do not see a strong demand from the retail investment market and this, coupled with increased regulatory attention, is likely to restrict growth outside the existing large players in this market."
Inheritance Tax Service
Meanwhile, the Money&Co. Inheritance Tax Service, which takes advantage of Business Relief, is proving popular.At present, estates with a value of more than £325,000 pay 40 per cent tax. This is reduced to 36 per cent if 10 per cent of the estate is given to charity.If the family home is passed on before death, then the threshold increases to £450,000. If the threshold is not met following the death of a partner or spouse, then the balance is added to the threshold for the surviving partner or spouse. Thus, the maximum threshold is £900,000 (family home passed on and partner or spouse dies with no assets).For more detail, click here.
Loan Latest And IFISA Process Guide
Money&Co. lenders have achieved an average return of more than 8 per cent gross (before we deduct our one per cent fee). Our latest, property-backed offering yields 8 per cent and has a five-year term.
That figure is the result of over £17 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.
Money&Co. has been lending for over 5 years and has only had one bad debt so far, representing a bad debt rate of 0.04 per cent per annum.
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:
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 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.