Chancellor offers fantastic package to support competition and innovation in financial services

“Yesterday the Chancellor gave a fantastic package to support competition and innovation in financial services.

“The long-awaited consultation on bonds in ISAs follows quickly on the heels of the current peer-to-peer ISA consultation, potentially allowing even more everyday investors to put their money to work directly in the real economy, bypassing banks and so earning better returns.”

“Peer-to-peer lenders can now also offset their losses against their gains and only pay tax on net returns, which gives this form of investing some of the same tax advantages as regular investing and therefore creates a more level playing field.”

“The increase in the cap for Social Investment Tax Relief (SITR) eligibility to £5 million per organisation per year shows that social lending and investing is coming of age. The Seed Enterprise Investment Scheme (SEIS) and Enterprise Investment Scheme (EIS) are the bedrock of equity crowdfunding in the UK, which grew by 250 per cent this year. SITR now offers the same level of tax benefits for socially-motivated lenders and investors, and will boost the social investment sector significantly.

“There are now millions of self-directed savers and investors choosing where to put their money for themselves rather than forking out for financial advisers. With crowdfunding, people can cut out the middlemen and see where their money is going and the impact it is making,

“We think people do have some social motivation in what they do with their money. This tax relief, which effectively boosts what was a 3.5 per cent return to a 5 per cent return, rewards those investors who value broader social benefits, rather than pure financial return, rather nicely.”