Approximately one year ago, at the Budget 2014, the UK Government committed to making P2P loans eligible for inclusion within Individual Savings Accounts (ISAs). On the 13th March BBCs Ramzan Karmali in anticipation of the Budget 2015 decision, wrote an article entitled: Will tax-free peer-to-peer lending get the go ahead. We explore the benefits of ISA within P2P as we wait expectantly for the decision.
As many in the peer-to-peer (P2P) space are aware, approximately one year ago, at the Budget 2014, the UK Government committed to making P2P loans eligible for inclusion within Individual Savings Accounts (ISAs). As with other P2P investing companies we are waiting expectantly for the decision on this, the expected implementation timeline, how we as P2P institutes can prepare our customers for this implementation and whether or not there has been any other movements by current ISA Managers to provide services for P2P.
In his article on the 13th March entitled “Budget 2015: Will tax-free peer-to-peer inesting get the go ahead”, http://bbc.in/1GWgWuM, BBCs Ramzan Karmali outlines the reason for the expectancy and excitement in relation to this announcement and the fact that although Investors can double or even treble their tax-free returns, there is some risk involved as this is not a straightforward savings account.
We at QuidCycle agree, but believe that the benefits outweigh the risks involved. Frank Mukahanana, our CEO, states that: “ISA inclusion in P2P is going to be a huge advantage to our clients. Currently, investors with QuidCycle get a healthy return of up to 6.5% . This move will allow our investors to access tax-free returns.” At QuidCycle, we are committed to providing mutually beneficial products for both borrowers and investors, in order to help the UK’s middle-income families and individuals achieve financial success.
Not only do our investors bypass the banks and earn decent returns, they are part of The Change, in that they have the opportunity to help families and individuals take control of their finances. Investors get a healthy return of up to 6.5% on the money they invest through us, with flexible terms depending on how long they wish to invest their money – however, the longer the commitment, the greater the return they will earn. They can grow their nest egg safely in the knowledge that their investments are spread across at least five borrowers. Our Provision Fund, which does provide some security against defaults, holds 1.5% of annualised instalments due across our entire loan book. For our borrowers, we remove the obstacles of personal finance via low-rate consolidation loans that enable them to pay off the money owed faster. We then go one step further and offer our borrowers an opportunity to earn up to a 4% bonus if they meet all of their repayments, complete a short course of online financial education and meet with an independent financial advisor, which we provide and pay for. We then go on to work with our borrowers until they become investors on our platform once their loan is repaid, using the money that formerly serviced repayments. Currently our average APR is 11%.
Research has shown that more and more people are turning to the alternative finance market as their money is not working hard enough for them within a traditional banking institution where low interest is common place. ISA inclusion within P2P would place it in the mainstream along with more traditional investments as well as extending the choice for investors. This would support and encourage growth within the P2P sector. Everybody would benefit. An article dated 2nd March by Every Investor also reveals that even Pensioners are considering alternative investments for their pensions funds as they would get more beneficial rates. Furthermore, as Ramzan pointed out, the Peer-to-Peer Finance Association (P2PFA), which represents the majority of the alternative financial services market in the UK, revealed that £1.2bn was lent by the entire industry in 2014 alone. Therefore, in our view, it can only benefit the UK Investors for ISAs to be included within P2P and soon, investors may able to enjoy great rates, tax free up to their ISA allowance at www.quidcycle.com/isa.
Note that your capital is at risk when investing and your money is not covered by the FSCS.