The update issue Times past, ThinCats had neither the resources to carry out extensive development of the platform, or to keep our lenders adequately informed. But that is changing. We have been putting considerable capital towards supporting lenders, and are allocating more.
Introducing Community Loans
We are pleased to introduce a new specialist Sponsor, Community Chest Business Loans Ltd, offering peer to peer loans for Social Enterprises that attract tax relief.
Over the coming months there will be a small number of Community Chest sponsored loans on the ThinCats platform, but it is very important to recognise that they are very different from the normal ThinCats secured loans.
The Government is keen to encourage private sector support for these social loans and the tax relief is an incentive to encourage investment that might otherwise be considered by some as unattractive – due to the modest returns and perceived risk. These loans produce social benefits as well as a financial return on your investment.
There are two different types of tax relief:
- “SITR” (Social Investment Tax Relief) which attracts 30% Income Tax refund in the first year for a three year loan.
- “CITR” (Community Investment Tax Relief) which attracts 5% per annum on a 5 year loan. There is a detailed comparison of the benefits and restrictions on the Community Chest website.
Tax treatment depends on the individual circumstances of each client and may be subject to change in the future. Tax relief also depends upon both the borrower and the lender qualifying and continuing to qualify throughout the life of the loan.
Community Chest business loans are very different from the normal secured loans found on the ThinCats platform and ThinCats lenders should make sure that they fully understand the different risk adjusted rate of return profile.
In particular there is no tax relief benefit as a lender making Community Chest loans unless you pay tax in the UK and are thus able to claim the attractive tax relief. Of course non-UK taxpayers can still invest in Community Chest loans if they really want to support a particular project but they would not qualify for the tax relief.
These new lending opportunities will not be appropriate for everyone so please make sure that you look out for these loans which will all be shown as sponsored by “Community Chest”.
You can find out more about Community Chest here.