Boom times? There are many regulatory and process hurdles to be negotiated, but the UK FinTech sector raised an impressive $11.6bn during the calendar year of 2021, according to figures from Innovate Finance, as reported by our friends at Altfi.
According to Innovate Finance, and harnessing data from PitchBook, the sector smashed its pre-pandemic record of $4.9bn which was raised in 2019 and the lower $4.1bn which was raised in 2020.
Globally the UK’s figures stack up well, with total deals (713) accounting for 11 per cent of the volume of global fintech investment deals last year.
By value of deals, the UK continues to lead in Europe, significantly ahead of Germany ($4.4bn), France ($2.3bn), Sweden ($1.7bn) and the Netherlands ($1.6bn).
Only the US remains ahead, with a whopping $46bn of fintech investment last year, helping to push global investment in the sector to $102bn, a 183 per cent increase on 2020.
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.