On 30th November 2017 we started rolling out the ISA account to all current investors. This means soon you will be able to earn attractive, stable returns tax-free.
How will the ISA account work?
The Funding Circle ISA will work just like your existing Funding Circle account, while also providing you with:
- A boost to your earning power – the interest you earn with an ISA is tax-free. As an example, if a higher rate taxpayer lends £20,000 through the Funding Circle ISA and earns a one-year return of 7.2* after fees and bad debt, their post-tax earnings after one year could increase from £864 to £1,440.
Flexibility – the ISA account is a flexi-ISA. This means you can withdraw any available funds without affecting your annual £20,000 ISA subscription limit, providing you transfer them back in by the end of the tax year.
A simple investment experience – creating an ISA account takes just a few minutes, and can be opened from your existing Funding Circle account using the same login details. Once opened, choose one of our two lending options and start lending.
- An easy way to build a well-diversified portfolio – we suggest lending £2,000 or more, so you can spread your funds across at least 100 businesses for a more stable return. If you would like to start with less, we are introducing an initial minimum card transfer of £1,000 when opening an ISA account or a new Classic account.
- No fees to access your money – as with your existing Funding Circle account there are no fees for selling your loans
As part of this process we’re also renaming existing Funding Circle accounts as the Classic account. Remember, by lending to businesses your capital is at risk, while tax rules and relief can change depending on your personal circumstances.
Providing every investor with the best possible lending experience
Based on the conversations we have had with investors, we expect the ISA to be popular. To manage this interest in the fairest way, and to ensure there are enough lending opportunities on the platform for all investors to continue earning attractive, stable returns, we will be opening up the ISA Account to all current investors (those who created an account before 23rd November) in the following order:
- Investors who are actively lending (have lent to a business since 1st May 2017)
- Investors not actively lending but who have previously transferred in funds
- Investors who have not previously transferred in funds
- New investors and those who have opened a Classic account after 23rd November 2017
We will open the ISA to each group of investors in the order their account was created. We will keep you updated on our progress over the next few months.
We’ll email you when your ISA is ready to be opened
Once you’ve received your email confirming you can now open your ISA, you’ll be able to login to your account through our website and create an ISA account in a few easy steps, subject to eligibility criteria:
To help manage demand, initially you won’t be able to transfer any existing ISA subscriptions you hold to your ISA account. You will be able to transfer your Funding Circle ISA to another ISA provider, although it’s important to remember that loan parts that can’t be sold won’t be transferred and will no longer be eligible for tax-free interest.
Once all current investors have had an opportunity to create an account, we will launch the ISA to new investors. Following this, we will start to rollout the ability for you to transfer in existing ISA subscriptions.
Although you can manage both an ISA account and a Classic account using the same login, it’s important to remember they are separate accounts that will lend to a separate portfolio of loans.
Transferring loan parts from your Classic account to your ISA account
Due to regulatory restrictions, you are unable to transfer loan parts directly from your Classic account to your ISA account. However you can sell your loans quickly and easily to other investors, providing they aren’t late or experiencing any credit issues, before withdrawing your funds to a UK bank account and then transferring them to your ISA.
We’re pleased to be able to provide you for the first time with attractive, stable returns tax-free. You can find out more about the ISA account, and register your interest if you are not currently lending through Funding Circle, here. More information can also be found in our FAQs. If you have any questions please get in touch.
The Funding Circle team
*The projected return is an estimate of the annual return, after fees and bad debts, that a diversified investor could earn by lending through the Balanced lending option as of 22nd January, 2017. You can see how the return is calculated here. Your actual return may be higher or lower, and by lending to businesses your capital is at risk.