6th February 2017
The New Year is a great time to review your personal finances. Something we are all guilty of is being tempted by headline offers of time limited high interest rates associated with financial products from incumbent institutions. It is the time to open your IFISA, thus giving you time to transfer and invest in growing businesses before the end of the tax year in April 2017.
Often lethargy institutions do not make sure that their customers are searching for the best products and rates on the market, this results in savers and investors not reviewing their finances and realising that they have been moved onto substantially lower interest rates.
This is especially true in the current financial climate, whereby interest rates have been slashed to a historic low of 0.25%. This has resulted in easy access cash ISAs, as well as current accounts, generating returns of less than 1%.
In 2017 downward pressure is also likely to take place on the finances of consumers due to the prediction of inflation rising to 4%.
Another compelling reason to review your finances in January, is that this give you three months to prepare for the end of the tax year, which finishes on 4 April.
Follow our top tips below to make sure that you are achieving your full net worth potential in 2017:
Use Up Your Full ISA Allowance For 2016/17
The current year’s ISA allowance is £15,240. It has to be utilised in the current tax year so any allocation not used by the end of the tax year is lost.
At present the average APR for debt campaigns, and the IFISA, on Crowd2Fund is 8.7%. If you are not using up your ISA allowance, this means that you are losing up to £1,326, alongside the compounding interest on the growth.
Opening up an IFISA on Crowd2Fund is a simple and free process. It takes around five minutes to register.
Transfer Existing Cash ISAs To the IFISA
Presently the highest returns offered for easy access cash ISA accounts is around 1%.
Failing to take action and move these funds into an IFISA in our platform means that you are forfeiting up to £1175 (the difference between the average APR on the current year’s IFISA and a full year’s interest on a best buy easy access 1% cash ISA).
The latter example only takes into consideration the opportunity cost of not transferring cash ISAs for the current tax year. The lost returns will be significantly larger if you have built up cash ISA allowances over a number of years.
Transferring cash ISAs to our IFISA is painless process, which can be processed by filling in this short form.
Once completed, it should take around 15 days to transfer your existing ISA’s to the IFISA.
There is no limit to the amount of ISAs your transfer to the IFISA. The existing ISAs transferred to the IFISA will still be held inside a tax wrapper.
Use Up Your 2016/17 Personal Savings Allowance
In the current tax year the Government introduced a new savings allowance, which allows individuals to benefit on tax free savings up to £1000 (for basic rate tax payers) and £500 (for higher rate tax savers).
Utilising this through investing in debt crowdfunding campaigns on our platform can generate up to £87 in tax free savings per year, which would otherwise generate virtually nil returns if kept as cash on deposit.
Investment through the personal savings allowance can be used alongside the IFISA, and would be most suitable for investors who have allocated their full 2016/17 ISA allowance.
Diversify Your P2P And IFISA Portfolio
Rather than lend all of your funds to one business, lend to a range of different companies across different sectors. This will help to mitigate against risk. Even if a business defaults on a loan payment (to date zero have done so on our platform), you will be less exposed overall.
As well as spreading your risk, you will be helping to support the economy by aiding growing businesses.
Remember to read the risk warning before investing:
Past performance and forecasts are not reliable indicators of future results. Tax treatment of any of the investment offers will depend on the individual circumstances of each investor and may be subject to change in the future. If you are unsure about any aspect of the information provided by the company, you should seek advice from an independent financial adviser. Do not invest more than you can afford to lose. Investing in start-ups and early stage businesses involves risks, including illiquidity, lack of dividends, loss of investment and dilution, and it should be done only as part of a diversified portfolio. Investing in start-ups may expose the individual concerned to a significant risk of losing all of the money or other assets invested. Peer to business lending through Crowd2Fund is not the same as holding a bank or building society savings account. When making a peer to business loan, your capital lent to a borrower is not covered for compensation in the event of a loss by the Financial Services Compensation Scheme. It may prove impossible to recover all or part of the loan by calling in the business assets held as security on that loan. Reward and Donation funding types are not regulated by the Financial Conduct Authority Crowd2Fund Limited is authorised and regulated by the Financial Conduct Authority (FRN 623683). Crowd2Fund Limited is registered in England and Wales. Registered No. 08472687 Registered Address: 242 Acklam Road, London, W10 5JJ.
Past performance and forecasts are not reliable indicators of future results. Your capital invested is not covered for compensation in the event of a loss by the FSCS. Tax treatment will depend on the individual circumstances and may be subject to change. Please see our Risk section before making an investment decision.