Funding Circle ISA Survey Results
Last year the Chancellor confirmed the introduction of the ‘Innovative Finance ISA’, which will launch 6th April. This will allow lending through marketplaces such as Funding Circle to be held within an ISA. Funding Circle’s new Innovative Finance ISA can be found here.
This is a seminal moment for the industry, and we know investors have been looking forward to earning tax free returns on their lending for a long time. We appreciate you have lots of questions on how our Funding Circle ISA will work and we wanted to include answers to some of the most common questions below.
Unfortunately, we don’t have answers to every question as some details are still being finalised with the Treasury and HMRC; however, as we have more information we will provide further updates on the blog.
What is the Innovative Finance ISA?
The Innovative Finance ISA allows investors to earn tax free returns on their peer-to-peer investments. The Funding Circle Innovative Finance ISA will for the first time enable individuals to lend money directly to businesses across the UK and earn tax-free returns.
Will Funding Circle offer an Innovative Finance ISA?
Yes. We are busy working on developments and expect to be ready by April 6th to offer a Funding Circle ISA to any investor. Only platforms fully authorised by the FCA can apply to become ISA Managers. We are currently going through the process of full authorisation and we will apply to be an ISA Manager as soon as we receive our full authorisation from the FCA. We will update investors as soon as we have more information.
Will the Funding Circle ISA operate any differently to my current Funding Circle account?
Lending through a Funding Circle ISA will work in exactly the same way as existing lending through Funding Circle, but it will be tax free. Investors will be able to lend directly to businesses across the UK, either automatically or manually and earn an expected return of 7% after fees and bad debts, whilst helping the British economy to grow. Your actual return may be higher or lower as by lending to businesses, your capital is at risk.
Will I be able to transfer my existing Funding Circle loan parts into the Funding Circle ISA?
Due to regulatory restrictions we will not be able to allow investors to directly transfer existing loan parts into a Funding Circle ISA. We appreciate this may be disappointing, however we have been informed this can’t be facilitated.
Will I have to open a new account or email address?
You may be required to have a new account separate to your existing Funding Circle account. We will provide exact details on what you will need to do over the coming weeks.
Will I be able to transfer my existing ISA investments over to the Funding Circle ISA
Yes, you will be able to transfer any existing investment from a cash or stock and shares ISA over to your new Funding Circle ISA. Additionally, from April you will have a further £15,240 allocation to invest in ISAs.
Can I subscribe to an IFISA with more than one provider?
No. Like any other ISA type, investors are only able to subscribe to one per tax year.
What happens if I go over my tax free allowance?
We will keep track of your lending within your ISA account to ensure you do not go over your limit. However, if you are also using a cash or stocks and shares ISA we will not be able to record your total ISA deposits. Please contact HMRC as soon as possible if you think you have gone over your total ISA limit.
Can I use Funding Circle within my stocks & shares ISA? What about the fund?
The Funding Circle SME Income Fund currently allows investors to lend to businesses in the U.S and U.K, as a listed security this may be able to be held within your stocks & shares ISA. For more information please speak to your stocks and shares ISA provider. More information on the fund can be found here.
Will it be popular?
Recently we sent out a survey to gauge potential interest in the upcoming Funding Circle ISA – around 2,500 investors replied, which is a fantastic response. Thank you to everyone for contributing your thoughts. The results from the survey have shown there is a lot of positive feeling towards opening a Funding Circle ISA. 93% of respondents said they would be interested in opening a Funding Circle ISA.
We hope this information was useful. As always, if you have any further questions please get in touch with the Customer Relations team at firstname.lastname@example.org
The Funding Circle Team