Don't invest unless you're prepared to lose money. This is a high-risk investment. You may not be able to access your money easily and are unlikely to be protected if something goes wrong. Take 2 minutes to learn more.

The Assetz Capital platform is no longer open to investment from individual investors. No new investments into peer-to-peer loans are possible and, as a result, no new funds should be deposited. The existing loan book relating to the Retail platform is now in run-off and this will, over time, deliver the return of capital to investors. Full information can be found here . Existing Retail lenders can still log in, view information regarding their account and loan holdings and operate their account in accordance with the information regarding the run-off provided on the link above. Please see this important message regarding the currency of the information on the pages on this website.

Chancellor seriously improves ISAs in his Budget

Chancellor seriously improves ISAs in his Budget

Tax-free savings shake-up: ISA limit to rise to £20,000

Speaking in Parliament on Wednesday, 16 March, George Osborne unveiled several new measures aimed at making tax-free saving and investment much more attractive.

The first -- and most important -- rabbit the Chancellor pulled out of his hat is his announcement that the yearly limit for investing in tax-free ISAs (Individual Savings Accounts) is to leap to £20,000 in the 2017/18 tax year.

In the current and coming tax years (2015/16 and 2016/17), British adults can save or invest up to £15,240 in ISAs. Today's news means that this tax-free allowance will rise by £4,760 from 6 April 2017. That's a hefty increase of almost a third (31.2%) on the current savings threshold for ISAs.

Of course, this is excellent news for savvy savers and investors, because raising the ISA limit so dramatically means that they will be able to shelter much more of their hard-earned cash safe from the taxman's grasp.

With almost 14 million British adults putting money into ISAs each year, this is welcome news for savers stressed by ultra-low deposit rates. Indeed, the Chancellor commented in his Budget speech that this move was made "to further help savers at a time of unprecedentedly low interest rates."

A big boost for P2P ISAs

What's more, this enhanced ISA limit of £20,000 from April 2017 will also apply to the new Innovative Finance ISA (IF ISA) being introduced in three weeks' time (on Wednesday, 6 April). The IF ISA -- already dubbed the 'P2P ISA' -- allows peer-to-peer investors to buy and hold P2P loans inside a tax-free ISA wrapper.

Having a considerably higher tax-free ISA allowance allows P2P investors to earn substantially more tax-free income from investing in peer-to-peer loans. To demonstrate this, take a look at the table below, which shows the tax-free interest income generated inside a P2P ISA earning 6% a year after bad debts:

 

Tax Year 2016/17 2017/18
Yearly P2P ISA limit £15,240 £20,000
P2P interest at 6% a year £914.40 £1,200

 

As you can see, the maximum contribution to a P2P ISA in the coming tax year is £15,240. Based on a return of 6% a year, this sum produces tax-free P2P interest income of £914.40.

However, in the 2017/18 tax year, the boosting of the ISA limit to £20,000 means that a P2P investor earning 6% a year could produce tax-free interest income inside an ISA of £1,200. That's an extra £285.60 a year in extra tax-free income, which is well worth having.

New Lifetime ISA for home-Buying & retirement

As well as hiking the ceiling for ISA investments, the Chancellor also unveiled the creation of a new 'Lifetime ISA'. This is aimed at helping adults under 40 to buy a home or boost their pension savings. Given its ability to contribute towards retirement saving, the Lifetime ISA has instantly been nicknamed 'the Pensions ISA'.

The Lifetime ISA, to be launched on 6 April 2017, allows savers aged 18 to 40 to deposit up to £4,000 a year and earn a bonus worth a quarter (25%) of their savings, up to a maximum bonus of £1,000 a year. These 25% bonuses will be paid until savers reach the age of 50.

The Chancellor said that savers would be able to make cash withdrawals from Lifetime ISAs at any time, without paying tax on these amounts withdrawn. Savers wanting to use this money to buy a home can do so after just one year, while those using Lifetime ISAs for retirement must wait until age 60 before accessing their savings.

Savers can use their Lifetime ISAs to buy property, but must be first-time buyers spending less than £450,000 to buy a home. Should savers decide to withdraw money from Lifetime ISAs for reasons other than home-buying or retirement, then they will lose their 25% bonus and a tax charge of 5% will apply to these withdrawals.

Commenting on the Chancellor's latest Budget, Stuart Law, co-founder and CEO of Assetz Capital, says,

"We at Assetz Capital are delighted with the news that the investment limit for ISAs will rise to £20,000 in just over a year from now. This is excellent news for savvy P2P lenders, as they will be able to generate appreciably more tax-free interest income from investing in P2P loans. With P2P ISAs set to launch in just three weeks, Assetz Capital looks forward to attracting a whole new world of income-seeking investors!"

RISK WARNING: "As with most forms of investment, peer-to-peer lending carries a degree of risk to your capital; in this case, if borrowers were unable to repay their loans. At Assetz Capital, we seek to reduce this risk to our investors by taking asset security on every loan, with the added benefit of a discretionary Provision Fund for some of our investment accounts."

- March 17, 2016

Back to News Stories