P2P Guide

35 P2P IN ACTION: LENDER CASE STUDIES Tax Efficiency Client in 50s who wants to use their IFISA to build a tax efficient pot of investments that are diversified away from their conventional portfolio. Trevor has a large portfolio of conventional investments split between his pension and ISA, but tighter pensions allowances mean he now has £10,000–£20,000 spare cash to invest annually Trevor is earning 4%-5% on his IFISA portfolio each year. ISA PENSION invested into P2P property with a conservative LTV £10,000 OPEN 1 YR (full allowance) invested into new IFISA £20,000 2 ND IFISA 2 YR He transfers some of his existing ISA portfolio out of low-yielding cash to his growing IFISA portfolio IFISA 3 YR 1 Starting to invest Professional client in 30s who wants full control of what she is investing in - looking for something worthwhile and initially shorter term. Carla is looking for an ethical investment that allows her a higher return than cash, but wants to access her capital again in the next 4-5 years as she is saving for the deposit on a buy-to-let property She invests in a portfolio of P2P loans that have been issued to finance renewable energy installations. She intends to invest her ISA allowance conventionally, and therefore only has £11,000 set aside for this investment initially. £11,000 P2P 5%-6% The platforms offer returns of 5%- 6% over terms of 2-5 years. 2-5 years 2 He and his adviser agree that some diversification would be sensible. However, Trevor does not enjoy taking unnecessary risk. With this in mind, Trevor’s adviser opens a new IFISA for him. IFISA Tax Since Carla is a basic rate taxpayer and does not use any of her Personal Savings Allowance on her ISA returns, the interest she receives on her P2P investment annually of up to £660 is within her £1,000 Personal Savings Allowance and no tax is due on it.