Here's a good tip from Money&Co.: Review your finances, and make the most of the remarkably attractive onshore tax deals. The UK taxman is offering investors an open goal. The policy objective is to encourage us all to take control of our savings and investments, and the tax treatment of Individual Saviogs Accounts (ISAs) is, as a consequence, very favourable.
THE tax year is almost over meaning your annual ISA allowance will soon run out, and reset. Before this happens, make sure you make the most of your tax-free allowance.
For the 2017/18 tax year the ISA allowance is £20,000, it increased from £15,240 in the 2016/17 tax year.
You can split your allowance across a Stock & Shares ISA and Cash ISA or invest it all in either one.
Couples can both use their ISA allowance, which means between them they can invest a total of £40,000 each tax year.
You can invest up to £20,000 in an Innovative Finance ISA...
At the beginning of each tax year your annual ISA allowance resets and you cannot carry your allowance over between years.
The new tax year starts on April 6, so up until April 5, 2018 is the 2017/18 tax year, then from April 6, 2018 to April 5, 2019 is the 2018/19 tax year.
The ISA allowance of £20,000 will remain the same in the 2018/19 tax year.
The new loan offering on the Money&Co. site joins an offering from webuyanyhome.com. This is a three-year, property-backed loan, rated A+. It offers a fixed-rate yield of 8 per cent, gross. The yield on both loans will translate into 7 per cent, net of our fee. If you decide to lend the full ??20,000 via an Innovative Finance ISA, you receive the income free of tax. See below for the process and the way the figures play out.
The ISA allowance for 2017/18 is ??20,000 per person. If you do not have a Money&Co. ISA, please consider opening one. It takes a few minutes to fill in the application form online. If you hold loans in an ISA wrapper, you will receive the interest completely tax-free. Money&Co.???s registered lenders have achieved an average return of over 7 per cent (net of our one per cent fee) in over three and a half years. That translates into a tax-free income of over £1,400 per annum for those taking advantage of the full allowance.
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:
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.
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 an earlier article on security, access and yield.
It's relatively easy to logon to our site and register to become a lender. But if that's all too new-fangled, you can call us on 020 3143 4004 or write to Money&Co., 58 Glentham Road, London SW13 9JJ. We'll then send you an ISA Brochure, and ISA Transfer Authority form (if you want to transfer monies from a Cash ISA) and a Freepost envelope. Then it's just a question of following your nose to get that income...