Calls for ISA extension as deadline looms

Peer to peer lending platform, Sourced Capital, has called for a delay to April’s ISA deadline due to the impact of the Coronavirus to allow those investing via an Innovative Finance, Cash or Stocks and Shares ISA to make the most of their tax-free allowance.

Sourced Capital, also looked at the returns of the Cash, Stocks and Shares and Innovative Finance ISA over the last year and whether or not it’s worth investing before the 5th April’s midnight deadline.

As it stands, savvy savers have until midnight on the 5th April to make the most of their tax-free ISA and pay in up to the limit of £20,000. Failure to do so will see them lose any unused allowance for this tax year. However, with the financial difficulty caused by the spread of the Coronavirus, Sourced Capital believes the deadline should be extended to October, to allow those investing via an ISA to maximise the allowed limit once they are more financially stable.

Any UK resident over the age of 16 is able to make the most of an ISA and they can either invest through the more straightforward Cash ISA, or a Stocks and Shares ISA which carries more risk but provide a better return on average. You can also save up to £20,000 tax-free via a combination of both a Cash and Stocks and Shares ISA if you please, although there are other options such as the Innovative Finance ISA which sits as a separate vehicle altogether and can yield a much better return, although again they do carry greater risk.

The latest data shows that in the tax year 2017-2018, £39.8bn was deposited into Cash ISAs, a 1.6% increase on the previous year. During the same year, £28.7bn was deposited into Stocks and Shares ISAs, a 28.6% uplift on the previous year.

But which has been the most lucrative for savers?

In the 2017-2018 tax year, the average saver deposited £5,115 into a cash ISA with the average rate of 1.31% bringing a return of £67. For those that deposited their full £20,000 allowance, the same rate of return would have resulted in an additional £262.

In the same period, the average saver deposited £10,124 into Stocks and Shares ISAs with an average rate of return hitting 4.8%. This brought the average saver a return of £486, but those depositing their whole £20,000 allowance would have seen a return of £960.

However, there has been an increase in the popularity for other saving investment vehicles with the Innovative Finance ISA becoming particularly popular.

With an average rate of return sitting at 10% and the average investor depositing £6,409, the Innovative Finance ISA returned £641 on average in 2017-2018. A £20,000 investment would have seen a return of £2,000. Past performance may not be indicative of future performance.

Stephen Moss, founder and MD of Sourced Capital, commented:

“There are just a few days left if you do want to make the most of your tax-free ISA allowance for this financial year, but with many of us now struggling to work due to the sanctions imposed because of the Coronavirus, we believe the Government should delay this deadline until October at least.

Doing so would hopefully allow for the dust to settle and for the many who have seen their income dwindle, to return to work and accumulate the savings necessary to maximise the benefit of their chosen ISA scheme.

With a second reduction in interest rates to a low of 0.1%, this is even more vital as the returns available were already slim, to say the least.”

What is an IFISA?

The IFISA is a category of ISA which was launched in April 2016 for UK taxpayers and can provide returns as high as 10-12% an annum, although capital is of, course, at risk and IFISAs do not have FSCS protection. Previously, there have been two main types of ISA: Cash ISAs and Stocks and Shares ISAs.

Similar to these ISAs, the IFISA allows you to invest money without paying personal income tax*. This enables you to invest your money into the growing peer to peer market.

Like cash ISAs Each tax year, you get an allowance of up to £20,000 to put into IFISAs which you can distribute across your different ISAs should you wish to. In addition, you can transfer your previous year’s ISA investments into your IFISA.

Sourced Capital are asking the government to extend the ISA deadline from 5th April to 1st October to enable those that would otherwise invest, time to do so rather than missing out on their allowance this year, given the current CoronaVirus Crisis.

  • Individuals should be aware that tax treatment depends on individual circumstances and are subject to change.

Please sign, share and support our campaign.

https://www.change.org/p/government-extend-the-isa-deadline-to-1st-october

Classic cars, coins and fine wine have been the best investments in the last five years

Just a day after posting its biggest one day decline, the price of gold skyrocketed last week as scares over the spread of the coronavirus caused a ‘flight into safe havens’ by many investors.

However, the latest research by the peer to peer lending platform, Sourced Capital, has found that over the last five years, gold has been one of the worst investments one can make.

Sourced Capital looked at the average annual rate of return across a number of traditional investment options over the last five years, which are topping the table as the most lucrative and what return you would have gained from a £1,000 investment.

The research shows that classic cars have been the best investment in the last five years, with an average annual rate of return hitting 16% meaning a £1,000 investment would see a return of £1,136 today in addition to your original investment.

While gold hasn’t fared so well, investing in rare coins has been a pretty safe bet, returning an additional £1,033 on a £1,000 investment with the average annual rate of return sitting at 15%.

Fine wines rank as the third most lucrative investment returning an average of 13% each year or £859 on your investment.

While prime bricks and mortar haven’t performed well with an average annual RoR of just 6%, investing through a peer to peer lending platform such as Souced has proved a much better option, with an annual RoR of 10% returning £611 in addition to a £1,000 investment.

Vintage watches (8%) jewellery (7%) and good old fashioned stamps (7%) have proved the next safest bet, while the FTSE 100 (6%) sits on par with prime property investment and as previously mentioned, gold brings up the rear with an average annual RoR of just 5% over the last five years.

Stephen Moss, founder and MD of Sourced Capital, commented:

“The recent surge in the popularity of gold is likely to be short-lived and although it can bring some huge returns, these more volatile options are also prone to huge losses.

When it comes to the more stable investment options, the classics such as cars, rare coins and fine wine seem to bring the most consistent returns on a long term basis. That said, while bricks and mortar has traditionally been as safe as houses, a Brexit inspired market slowdown has even seen that drop down the table.

However, we’ve also seen investment in the property sector evolve as a result with a greater preference to invest via peer to peer platforms and while capital is always at risk, new-age options such as the Innovative Finance ISA have seen many investors average 10% annually through property investment, with some achieving returns as high as 12%.”

What is an IFISA?

The IFISA is a category of ISA which was launched in April 2016 for UK taxpayers and can provide returns as high as 10-12% an annum, although capital is of, course, at risk. Previously, there have been two main types of ISA: Cash ISAs and Stocks and Shares ISAs.

Similar to these ISAs, the IFISA allows you to invest money without paying personal income tax. This enables you to invest your money into the growing peer to peer market.

Like cash ISAs Each tax year, you get an allowance of up to £20,000 to put into IFISAs which you can distribute across your different ISAs should you wish to. In addition, you can transfer your previous year’s ISA investments into your IFISA. Unlike cash ISAs, funds held in an IF ISA are not protected by the FSCS.

One should keep in mind that tax treatment depends on the individual circumstances of each client and may be subject to change in future.

 

The property investment North-South (Midlands) divide

The latest research from peer to peer lending platform, Sourced Capital of the Sourced.co Group, has looked at where’s best to invest in bricks and mortar across the north, south and midlands regions of Britain.

Location can be vital when investing in property and regional influences can make the difference between profit and loss, so Sourced Capital has dissected the market based on the value of a property and the total value sold, as well as demand for these properties based on the volume of transactions.

The North-South divide is a very contentious issue but with the Midlands becoming a property powerhouse in its own right over the last few years, Sourced Capital totted up the totals based on: –

  • The North including the North West, North East, Yorkshire and the Humber and Scotland.
  • The South including the East of England, London, the South East and South West.
  • The Midlands including the East and West Midlands and Wales.

The figures show that despite much talk of the Northern Powerhouse, the South remains in pole position where the property market is concerned. In the last 12 months, house prices across the South have averaged £335,567 with £132.7bn worth of property sold across 401,606 transactions.

The North doesn’t trail by much when it comes to the churn of property sales though, with 333,262 transactions over the last month, although the value of these properties is significantly lower with the average property going for £152,276 with a total value of £52.1bn.

The Midlands and Wales accounted for the lowest level of transactions at 67,862 and while total value also trailed at just £12.8bn, the average house price does exceed that of the North at £185,241.

Stephen Moss, founder and MD of Sourced Capital, commented:

“When it comes to the sheer volume of transactions and the value of bricks and mortar, the South continues to lead the way and while this is largely driven by London, each region provides an attractive proposition when it comes to investing from both a demand and value point of view.

However, the North isn’t far behind when it comes to demand for housing and with the exception of the North East, it’s fair to say the property market across the majority of the North and even parts of the Midlands can go toe to toe with the South on transaction volume.

Scotland and the North West have seen the highest level of transactions outside of London in the last 12 months which demonstrates that the need for property investment doesn’t dry up once you reach Milton Keynes. While property values are lower on average, a good investment isn’t built on these alone and it’s finding the balance between cost, demand and return that will make your bricks and mortar venture a success.

Traditionally, the average buy-to-let landlord tends to invest close to home as they know the area and it also makes managing their investment that much easier. However, the rise of the armchair investor via peer to peer lending platforms means this is no longer the norm.

You can now spread your property investments across the length and breadth of the nation, all from the comfort of your front room. This means you can place some of your property investment eggs in London, some in the Midlands and some in the North West and Scotland, if you so wish to do so.

Spreading your investment also reduces the risk of more granular market influences. As we’ve seen over the last year due to Brexit, London cooled considerably while much of the Midlands and the North continued to register healthy levels of price growth. Building a diverse portfolio via a peer to peer platform allows you to adapt to this changing landscape and ensures your investment remains as profitable as it can be.”