The chequered career of the listed vehicle route to investing in peer-to-peer (P2P) lending continues. This time, the news appears to be good.
For the record, Money&Co.’s preferred route is more direct. We bring individuals looking for good returns on capital together with companies seeks funds to grow.
ALTERNATIVE lending investment trust VPC Specialty Lending has been re-admitted into the FTSE All-Share Index, after being relegated in June over liquidity issues.
It was initially reported that the trust had failed the Index’s liquidity test last month, however a reanalysis of the liquidity data found that if it weren’t for a small reporting error from an OTC trading exchange, VPC would have passed the liquidity test. The trust will be officially reinstated to the FTSE All Share Index from Thursday 1 August.
Loan Latest And IFISA Process Guide
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.
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.