The Abundance ISA will initially pay investors a return of 2% p.a. on money paid in from April 6th, through to October. Then, the customer will choose which renewable energy project(s) available on the platform they would like to invest in, and receive an effective rate of return of between 6% and 9%*, depending on the project. The October date is controlled by Government legislation and is subject to confirmation.
All returns paid to Abundance ISA investors will be free of any personal liability to income or capital gains tax, increasing the financial benefit of their Abundance investments by 20, 40 or 45%, depending on the customer’s marginal rate of income tax.
Bruce Davis, cofounder and joint MD of Abundance said:
“The Innovative Finance ISA is a very exciting product, offering ISA buyers a much-needed risk/return middle ground between the very low returns paid by Cash ISAs and the wild volatility of global markets offered in Stocks and Shares ISAs. More than this, our product is the ‘Nicer ISA’, offering unique ‘win win’ investments that pay attractive returns every six months at relatively low risk, while creating something good for the environment and society.
“The new ISA wrapper means that Abundance investors will enjoy even better returns in their pockets because of the tax breaks, encouraging them to invest even more in the better future that our projects contribute towards. The latest Great British Money Survey confirms that more than 2/3rds of adults in the UK want to get a decent return on their investments but without harming our future, so there is huge latent demand for this proposition.
“Given that previous years’ Cash ISAs and Stocks & Shares ISAs can also be transferred into an Abundance ISA, this new product could do wonders for the thousands of investors needing a more diversified portfolio whilst unleashing a massive movement of money from holdings doing little or nothing for the UK, into projects vital for growth in our real economy and for the future of our environment.”
Abundance will be one of the very first P2P investment platforms able to accept money into its IFISA come April 6th, as it appears to be the only provider to have obtained the necessary regulatory approval from the FCA in time.
Bruce Davis said:
“Being first into the IFISA market has been a five year journey that started back in 2009 before we launched, when we chose to pursue a regulated route to market. A costly two year process with the regulator followed to gain authorisation and made Abundance the very first regulated P2P platform in the UK. Five years on it makes sense and seems appropriate that the Abundance platform is set to offer the first IFISA available.
“We want to see more providers offering the IFISA very soon, but you can never underestimate the challenges of becoming authorised and the high level of scrutiny with which the regulator treats each application.”
Investment in projects offered by Abundance – whether to be held in the Abundance ISA or Pension wrappers or not – is made through the purchase of Debentures. These are official ‘IOUs’ that commit to pay returns on top of the original capital. Payments are likely to be made to the investor twice yearly, with each made up of a small part of the original capital invested and part return, so that by the end of the term, all capital has been repaid, along with the return. Returns will be paid throughout the term, but investors wishing to cash in early can sell their holdings on to others via the Abundance website at no additional cost. Effective rates of return will vary across the different projects, and over time in each project.